Kuwait-based Warba Bank recently expanded its global investment products offering by establishing a Cayman Islands-based Shariah compliant structure – with access to this private fund restricted to its network of high net-worth clients.
This Warba Islamic Income Fund aims to generate sustainable returns and its development was facilitated with support by the Maples Group, said Fred Tabbal, the latter firm’s Middle East regional head of fund services.
It was established to meet demand from investors in the MENA region, who have been looking into alternative asset classes – such as US private credit – as of late in the search for strong returns and to achieve diversification.
The fund, developed with global asset manager Carlyle Group, has a defensive Shariah compliant investment portfolio focused on senior-secured direct financing arrangements in mid-sized US companies.
“The fund invests in a bespoke US credit fund created specifically for Warba Bank by a recognized major US fund manager, which deploys first lien, senior secured financing arrangements to medium-sized private companies in the US,” Maples Dubai Partner Gurminder Sanghera told IFN Investor.
“It is predominantly cash flow financing, a type of funding where a company borrows money based on the projected future cash flows of the business. The loan is typically repaid using the incoming cash flows from the company’s operations,” explained Maples Dubai Associate David Garvin.
On why an offshore domicile was chosen for this exempt fund, Gurminder said: “The Cayman Islands offers an efficient and flexible corporate regime … for structured finance transactions.
“The structure is innovative in that it allows Shariah compliant funds to be invested in conventional assets classes such as credit using Shariah structuring. The transaction was ambitious because of the intended size of the raise, which ended up being easily surpassed.”
David added that the fund structure was designed for seamless replication and could be used to invest into numerous other investment products established by US investment managers.
“US managers are particularly comfortable with Cayman-domiciled funds due to the jurisdictions tax neutrality, robust legal framework, and well-established reputation as a leading offshore investment funds domicile.
“This familiarity further positions the bank to expand its offerings confidently and efficiently.”
*Disclaimer: The opinions and viewpoints expressed in the Fund report do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.
Warba Islamic Income Fund | |
Fund manager | Warba Bank and Carlyle Group |
Closing date | 8th January 2025 |
Asset class | US credit funds – senior-secured direct financing arrangements in mid-sized US companies |
Base currency | US dollar |
Fund total value | US$200 million |
Investment objective | To achieve capital appreciation over the long term by investing in public equities and assets compatible with Shariah guidelines |
Risk profile | High risk |
Dividend distribution | Quarterly over five years |