South Africa’s 27Four Investment Managers will be looking to launch a Shariah compliant fund in UK later in 2024.
Beta Solutions Head Associate Professor Daniel Page shared with IFN Investor this expansion plan for the firm’s 27four Best View Shari’ah Global Fund, which currently operates as a retail-focused offering within South Africa. “This is now a live pool and we are aiming to turn it into a collective investment scheme or CIS, also known as unit trusts.” This fund has a current valuation of ZAR50 million (US$2.65 million).
Leveraging its investment strategy off the MSCI World Islamic Index, this fund’s stocks are selected based on current market capitalization size plus determinants like sales and earnings stability, balance sheet strength and profitability.
The portfolio will be rebalanced quarterly to allow new entrants based on the underlying share market movements, updated performance data as well as the inclusion and exclusion of shares based on their Shariah compliance.
Daniel said this fund has not yet been certified to comply with Shariah investment standards outside South Africa and efforts are currently underway to meet the necessary requirements for the UK offering — including non-permissible Shariah cleansing.
This is the latest effort by 27Four to expand its investor pool beyond South Africa, having already drawn significant interest in its private equity Agrarius Sukuk program.
With no actual purchase of underlying assets as of yet, this Johannesburg Stock Exchange-listed Sukuk program currently provides working capital facilities to farmers at better rates than what typical banks can offer.
The Sukuk issuance is based on a Wakalah structure which allows it to apply an array of Islamic contracts when financing projects including Musharakah, Mudarabah, Murabahah, Ijarah, Salam and Istisna.
The maximum issuance size is ZAR10 billion (US$530 million) with two tranches issued so far of ZAR500 million (US$26.53 million) in 2022 and ZAR600 million (US$31.83 million) last year.
Daniel said the Agrarius Sukuk facility has drawn considerable interest from GCC investors and 27Four is looking at conducting two issuances annually from now on with ZAR500 million each until the maximum is reached.
At present, 27Four handles both retail and institutional investors with its assets under management (AuM) standing at around ZAR65 billion (US$3.45 billion). The majority of these investments are in the institutional fund of funds, investing mainly in highly liquid, public equity markets.
As one of the largest Shariah players in the South Africa marketplace, its total Shariah AuM stands at almost ZAR6 billion (US$318.3 million).
