Jeddah-headquartered alternative investments manager Sidra Capital will be deepening its Australian exposure following its recent inaugural foray into the country with a private credit investment fund focusing on the mining and energy sector, Asia Pacific Investments Head Azlan Firman shared with IFN Investor.
Following this maiden deal, Azlan said Sidra Capital will continue working with partners in Australia to explore other Shariah compliant fund structures – like Wakalah or Istisna – to ensure compliance with the Australian tax rules.
“We are going to look at various sectors, not just mining. We can do property, education, logistics and more. As long as the underlying assets and business are Shariah compliant while making financial sense for us and our investors.”
The Sidra Asia Pacific Private Investments Sub-Fund I, launched in April, is the initial under a Singapore-domiciled variable capital company (VCC) or umbrella fund structure, with a specific function of refinancing an existing conventional facility into a Shariah compliant model.
“This is a pretty straightforward deal because this is our first private finance transaction in Australia and the VCC, regulated by MAS (Monetary Authority of Singapore), can be used for more new projects as we are actively exploring more opportunities there.”
Managed by Sidra Capital’s Singapore team, the AU$22.5 million (US$14.38 million) refinancing facility is for three years with a fleet of mining equipment as collateral. During this facility period, 60% of the principal must be paid the balance 40% on the maturity date.
With a strong collateral coverage of 1.5 times and the amortizing structure resulting in an effective fund duration of 2.3 years, Azlan explained this low-volatility investment provides quarterly income distribution and a stable fixed yield, with foreign exchange hedging as safeguards for both capital and income.
The commodity Murabahah transaction was conducted via Malaysia’s Bursa Suq Al-Sila with purchase of crude palm oil as third party assets. The whole deal structure was commercially more appealing to the counterparty client, Azlan noted.
“We sell to the counterparty at the markup price. The counterparty will sell the palm oil back at the cost price. The difference between our selling price to the counterparty and what the counterparty gets when it sells the palm oil back at the Bursa is our profit margin.” There are eight Islamic funds in Australia managing US$339.39 million in assets as of the 1st May 2025, according to the IFN Investor Fund Database.
