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  1. 1. Vol 7 Issue 23 9th June 2010 The World’s Global Islamic Finance News Provider AL ER TS Register now - It’s free The right approach is key In this issue IFN Rapid ..................................................... 2The New Muslim Consumer is a new Mutanaqisah in particular are explored in a Islamic Finance News ................................ 3phenomenon that the world is becoming two part series that focuses on the solicitor. It Takaful News ................. .............................7aware of and coming to grips with as a covers an introduction to the facility and thepowerful and untapped market audience. In a differing expecactions that the banks and the Rating News ................................................ 8pioneering research done by communications customer expects of the solicitor. IFN Report:group Ogilvy & Mather in collaboration with First US fund manager.............................. 9market research specialist TNS, the New Private equity and venture capital have the Eager for Islamic investors..................... 9Muslim Consumer is defined as young, proud potential to be key growth engines for theof their religion and with substantial spending Islamic finance industry. Shariah compliant Articles:power. private equity and seems plausible if the right Thai SEC To Permit Sukuk Issuance — First Deals Likely To Follow .............. 10 human capital is deployed, that can combineTheir profile debunks the many myths and not only advance finance skills but also solid The Role of Venture Capital Model instereotypes that surround Muslim consumer knowledge of Shariah. an Islamic Economic System ..............12attitudes towards brands and their marketing Private Equity — Its Relevance forcommunications. The role of venture capital in an Islamic Islamic Finance Today ..........................14 economic system seems likely only if the Ogilvy Noor Targets the New MuslimMore importantly, the study highlights the government facilitates it. The critical issues Consumer ............................................... 16risks that exist once Muslim consumers include an adequate legal framework, and Musharakah Mutanaqisah Financingare alienated, and provides guidelines for Facilities Legal Issues and Challenges easy entry and exit mechanism and potentialcompanies on how to avoid a mistaken (Part I) .....................................................18 entrepreneurs. It seems ideal for Islamicapproach in their marketing communications. Takaful Surplus Distribution: finance through the participatory financing A Controversy ......................................... 21 modes with the Mudarabah concept beingThe study serves as a platform for the the most common.launch of Ogilvy Noor, a joint venture of Forum .........................................................23Ogilvy & Mather and TNS, which aims to be Meet the Head .......................................... 24 The Thai Securities Commission is currentlya multidisciplinary global Islamic branding Yeo Wico, Partner of Allen & Gledhill in the process of issuing a new regulation bypractice that aims to help brands better July this year that permits both domestic and Termsheet ..................................................25engage with Muslim consumers worldwide. MTD Infraperdana Islamic Dual Tranches Medium international issuances of Sukuk certificates. Term NotesA mistaken approach is often taken by Takaful Moves .........................................................26marketers when wooing customers. There The country’s ministry of finance has alsois a misconception that Takaful is basically prepared a draft regulation to exempt the Deal Tracker .............................................. 27insurance with surplus distribution. This originator from land transfer taxes and Islamic Funds Tables ................................28image does not do justice to Takaful operators, registration fees, which is up for cabinet approval. S&P Shariah Indexes ...............................29as surplus distribution overshadows theconcept of Tabarru, or risk sharing, which is Dow Jones Shariah Indexes ....................30at the very heart of Takaful. So we put surplus In the coming months, there is talk that Islamic League Tables ............................. 31distribution under scrutiny as it applies to the the Bank of Thailand plans to issue a Baht denominated Sukuk with an issue size of Thomson Reuters League Tables ...........34Wakalah and Mudarabah models, and studyit for appropriateness and viability. approximately THB5 Billion (US$153 million). Events Diary............................................... 37 Given this situation, Allen & Overy Thailand Company Index .........................................38The legal issues and challenges in the takes us through the first few deals likely tocontract of Musharakah, and Musharakah follow. Subscription Form ....................................38
  2. 2. A round-up of all this week’s news IFN RAPID •NEWS • Gulf African Bank reaps maiden • Brunei can build halal sector via Sukuk • Early purchase for Takaful and insurance vital, says expert profits after launch in 2008 • Absa Islamic Bank launches new • Islamic Finance news to host IFN Roadshow at Grand Hyatt Istanbul in Turkey RATINGS • RAM reaffirms AEON Credit Service’s Islamic product enhanced long-term rating of ‘AA1’ • Bank of London and the Middle East • ApexAfrica Capital is set to launch a sets up Reval software • RAM revises Senai-Desaru Shariah compliant unit trust Expressway’s rating to ‘BBB3’ • Russia and the Commonwealth of • Islamic Finance news hosts roadshow Independent States offer room for • RAM reaffirms Esso’s Islamic papers at the American University in Cairo Islamic finance growth at ‘P1’ • S&P has affirmed the ratings of • The North Jersey Federal • Kuwait Turkish American International Assurance Credit Union offers Islamic Participation Bank plans for Company banking Islamic bonds • S&P assigns ‘A-’ on Malaysia’s global Sukuk • Fortis battles Khazanah Nasional in • Islamic finance faces a challenge in • RAM reaffirms Public Islamic Bank’s bid for Parkway Healthcare corporate governance long- and short-term financial • Al Rajhi Bank to use Trasset treasury • Shariah scholars to define application institution ratings management solution of riba • RAM affirms National Bank of Abu • The Monetary Authority of Singapore • Qatar issues local currency-based Dhabi at ‘AAA’ and ‘P1’ will relax its regulations to expand Sukuk • S&P revises The Saudi Investment Islamic finance • Dubai government to keep investors Bank’s outlook to stable • Malaysia’s Islamic banking sector informed on developments • Fitch rates Mumtalakat Holding close to reaching targeted market • Gulf Bank to be sales agent for two Company at ‘A’ with a stable outlook share GCC funds • Moody’s downgrades Dubai Bank to • The Malaysian International Islamic • Sharjah Islamic Bank unveils ‘Baa2’/Prime-3 from ‘A3’/’Prime-2’ Financial Centre, Bank Negara ‘Employee Payment’ program and the Securities Commission launch global search for outstanding individual in Islamic finance • National Bank of Kuwait unveils MOVES • Omar Merican steps down as Bursa Thahabi Ijara Fund VI Malaysia’s chief operating officer • Merger plan to proceed, despite • The International Sharia takeover plans by Dubai Islamic • Macquarie Capital hires Steve Research Academy for Bank Baldwin as its managing director and head of UK corporate broking. Islamic Finance to work on • HSBC Amanah to open Islamic Islamic pricing next year banking branch in Doha • GE Capital appoints Alan Austin as regional director • Ahmed Salem Bugshan Group to • Pakistan to double its Islamic raise US$100 million Sukuk • HSBC appoints Mohammad Al banking services in three years Tuwaijri as new MENA head • Capitas Group International releases • Bank Negara Malaysia says no to whitepaper • Barclays appoints Aaron Gurwitz as Affin Holdings’s takeover discussion CEO • Abu Dhabi Islamic Bank unveils new • ICB Islamic Bank to change hands brand identity • Matthew Moran joins BNP Paribas as director in global execution services • AmIslamic Bank inks pact to be TAKAFUL group financier and facility agent • Hong Kong Monetary Authority • Islamic finance to provide alternative • Metropolitan Life Insurance unveils appoints Mu Huaipeng as senior source of funding for Australian banks insurance for Muslims advisor • The Kerala High Court adjourns • Malaysian consumer group wants • Trowers & Hamlins recruits four new petition against the formation motor insurance policy plan to be lawyers of Al Baraka Financial Services shelved Corporation • Vince Niblett is Deloitte Touche • Prudential quits American Tohmatsu’s new global leader for • CIMB Standard has been rebranded International Group’s deal due to a audit to CapAsia price disagreement © Page 2 9th June 2010
  3. 3. NEWS www.islamicfinancenews.comAFRICA discussions. REDmoney Group is the organizer for this roadshow. financial cooperative that serves 30,000 members.Rural banking growthKENYA: Gulf African Bank has recorded agross profit of KES25 million (US$312,000) AMERICAS ASIAin the first quarter of 2010, the first time Meeting Shariah needs Vying for controlsince its launch in 2008. US: The North Jersey Federal Credit Union SINGAPORE: India-based Fortis HealthcareDuring this period, customer deposits has created an Islamic banking division to is up against Khazanah Nasional to gainhave doubled to reach estimated levels of cater to the needs of its Muslim members. a controlling stake in healthcare group,KES16.4 billion (US$204.6 million), which Parkway Holdings.will propel its anticipated financing program According to the credit union, New Jersey isat ease. home to the second largest percentage of Fortis increased its stake in Parkway Muslims in the country. by 0.03% through the purchase ofThe Gulf African Bank was launched with 350,000 shares on the market just prioran investment of KES1.75 billion (US$21.8 Founded in 1936, the North Jersey Federal to Khazanah’s offer of SG$1.18 billionmillion). It was formed to provide banking Credit Union is a member-owned, non-profit to Muslim communities andthose neglected by mainstream financialinstitutions.Banking for all SONG BIRDSSOUTH AFRICA: Absa Islamic Bank andAbsa Private Bank have launched an Islamicprivate banking solution.The product will provide equal bankingopportunity for Muslims in the country.Absa Islamic Bank and Absa Private Bankare the subsidiaries of Absa Bank.Pioneer Islamic unit trustKENYA: ApexAfrica Capital is set to launcha Shariah compliant unit trust. It is the firstIslamic equity product to make its presencein East Africa.The unit trust is available with a minimum of A language we are most fluent in.KES25, 000 (US$304).Law firm Hamilton Harrison & Mathews willadvise ApexAfrica Capital on this issuance.Staying informedEGYPT: Islamic Finance news will host an IFNRoadshow at the American University in Cairoon the 9th June.The one-day only roadshow aims to exploreand analyze the latest developments in theEgyptian Islamic financial market.The Egyptian General Authority forInvestment chairman Osama Salleh willdeliver the key-note luncheon presentation,and 20 key industry practitioners willparticipate in a series of round-table © Page 3 9th June 2010
  4. 4. NEWS www.islamicfinancenews.comcontinued... The selection process will be based on an Traders, Alliance Holdings, Summit Alliance independent international jury, chaired by Port and Shore Cap Holdings.(US$835 million) through its subsidiary, World Islamic Economic Forum chairman TunIntegrated Healthcare. Musa Hitam. The decision is due to growing concerns on high bad debt provisioning. The changeKhazanah may have plans to issue up to of hands is expected to be completed bySG$500 million (US$ 354 million) in Islamic Viability study September 2010 based on regulatorybonds to finance the deal, which would be approval.Khazanah’s first bond issue in Singaporean MALAYSIA: The International Shariadollars. Research Academy for Islamic Finance (ISRA) ICB Banking Group acquired 50.1% of the will complete its study into the viability of an issued share capital of Oriental Bank inFortis bought into Parkway in March and Islamic benchmark pricing rate in 2011. 2006 when Bank Bangladesh dissolvedcurrently holds a 25.37% stake, while the latter on grounds of mismanagement.Khazanah owns 23.2% of the company. The study will incorporate industry feedback Oriental Bank was subsequently renamed as including the concern on the difficulty of ICB Islamic Bank. running two policy rates within one bankingNew software system.MALAYSIA: Al Rajhi Bank will start using Double rolesthe Trasset software solution developed in ISRA proposed that Malaysian Islamic banks MALAYSIA: AmIslamic Bank signed aHungary for treasury management. use industry specific benchmark pricing rates MoU with state education loan provider that are derived from underlying assets. Perbadanan Tabung Pendidikan TinggiThe new software which replaces Thompson Nasional (PTPTN) to become a financierReuters’ Kondor+ has a wide range of Doubling services and facility agent for a 10-year RM1.5solutions including Sukuk management,Mudarabah-based wealth management and continued... PAKISTAN: The country plans to double itsIslamic financing. Islamic banking services in the next three years to meet rising demand and interest forRoom for growth investments that comply with Muslim tenets, according to the central bank.SINGAPORE: The Monetary Authority ofSingapore (MAS) will relax regulations onbusiness related or complementary to core State Bank of Pakistan director of Islamic banking Salim Ullah said the growth will I = INDEPENDENTfinancial business. be driven by domestic factors, and also by increased global interest in Islamic finance. F = FACTUALThe new consultation paper issued by MAShas identified the need to adopt a case The central bank has given prior approval to N = NEUTRALby case approach in allowing financial establish two new Islamic banks, bringinginstitutions to develop new businesses that the total to eight Islamic banks.are related or complementary to the bank’smain functions, which may not be clearlyfinancial. Islamic finance is among the key No to takeover talksareas covered in these new guidelines. MALAYSIA: Bank Negara Malaysia has rejected Affin Holdings’ request to start talksOn the right path with EON Capital for a possible takeover.MALAYSIA: The country’s Islamic bankingsystem is well on track to achieve the goal of The central bank’s decision now leaves Hongthe Islamic Financial Services Master Plan Leong Bank as the sole bidder for EON’s banking assets. DON’T YOUof 20% of total banking market share by theend of 2010. Hong Leong Islamic Bank is a subsidiary of THINK YOUCurrently, the market share of Islamic bank-ing in the total banking sector is 19.6%. Hong Leong Bank. SHOULD BE New owners SUBSCRIBING?Global award BANGLADESH: ICB Banking Group, theGLOBAL: The Malaysian International Islamic majority shareholder of ICB Islamic Bank hasFinancial Centre (MIFC), Bank Negara and signed an agreement with a local consortiumthe Securities Commission have launched to sell its controlling stake.a global search to recognize and honor For more information, visitoutstanding contributions of an individual in The new owners are Summit Industrial www.islamicfinancenews.comthe Islamic finance industry. and Mercantile Corporation, Cosmopolitan © Page 4 9th June 2010
  5. 5. NEWS www.islamicfinancenews.comcontinued... Group and South Africa-based Standard Bank in-house software application for fair-value Group. It specializes in middle level capital hedging of its large portfolio of Sukuk andbillion (US$451 million) Bai Al Inah term infrastructure investments in Southeast Asia for cash-flow hedging of its portfolio offinancing. and Central Asia. deposits.The proceeds of the facility will be utilized CapAsia currently manages about US$460 Reval is a risk management and hedgeto provide Shariah compliant education million worth of infrastructure investment accounting solutions provider.financing for PTPTN. funds around the region. The bulk of it is in Malaysia and Indonesia. Shariah investments toBright prospects It currently manages three main funds — the expand South East Asian Strategic Assets Fund,AUSTRALIA: The development of Islamic RUSSIA: Russia and the Commonwealth Islamic Infrastructure Fund, and the Asiafinance in the country could provide banks of Independent States (CIS) has been Infrastructure Fund.with an alternative source of wholesale identified as a promising destination for thefunding and draw Islamic banks to set up introduction of Shariah compliant bankingoperations in the country. Industry booster and finance.In addition, assistant treasurer Nick Sherry BRUNEI: The country can build the halal According to Dubai-based Amanie Islamicsaid that it would also attract investment in sector via Islamic finance by raising capital Finance Consultancy and EducationAustralian assets from Shariah investors, through the issuance of Sukuk. executive director Mark Smyth, Russia beingoffer new funding routes through Sukuk and the 8th largest economy in the world housesallow the establishment of Shariah compliant Thomson Reuters global head of Islamic 20 million Muslims.investment products. finance and OIC countries Rushdi Siddiqui said that increased investment in the form “Russia has managed to maintain its perSherry attributes this to the excess liquidity of Sukuk will develop more Shariah based capita income levels at US$15,100 despitegenerated from oil revenues in the Middle companies as opposed to Shariah compliant the global recession and lower oil prices.East and the increase in economic growth companies. The untapped markets in the CIS shouldin countries with huge Muslim populations, be the key focus for Shariah compliantsuch as Indonesia, India and Pakistan. He said that the investments would create investments,” he said. the necessary environment to establishThe government has recently pledged to Shariah based companies which need not beamend tax laws to win a slice of Islamic screened, enabling Brunei to be a leader in Sukuk in the pipelinefinance market. this area. TURKEY: Kuwait Turkish Participation Bank will launch a US$100 million Sukuk in thePetition postponed EUROPE next two to three months.INDIA: The Kerala High Court has adjourned The bank plans to raise the funds fromthe petition challenging the establishment Staying up-to-date GCC investors, as there is a little liquidity inof Al Baraka Financial Services Corporation Europe. It also plans to conduct roadshowsunder the Islamic banking system in Kerala TURKEY: Islamic Finance news will host an IFN Roadshow at Grand Hyatt Istanbul on the in Dubai and Saudi Arabia to attract potentialto the 7th September. 11th June. investors for the Sukuk.A division bench adjourned the petition on This one-day only roadshow aims to generate According to its Dubai’s branch seniorthe formation of Al Baraka with 11% stake ideas, explore and analyze the latest executive officer Rahim Albayrak, thefor Kerala State Industrial Development developments in the Turkish participation proceeds will be used to boost the bank’sCorporation (KSIDC), based on a request of financial market. capital and fuel expansion plans.Reserve Bank of India seeking more time.The KSIDC had proposed the first state- Central Bank of the Republic of Turkey’s boardaided Islamic Bank in Kochi in 2009, withplans to register the bank as a non-banking member Professor Turalay Kenc, will deliver the key-note address, followed by a series of GLOBALfinance company and later transform it into a round-table discussions with 21 key industry Conflicting interestShariah compliant bank. practitioners from around the region. GLOBAL: Islamic finance faces a challenge REDmoney Group is the organizer for this in corporate governance in aligning theNew name event. ideas of the Shariah board with those of the management of institutions, according to aMALAYSIA: CIMB Standard has been scholar.rebranded to CapAsia. Hedging technology According to the University of BahrainCIMB Standard is a joint venture private equity UK: Bank of London and the Middle East scholar and National Corporate Governancefund manager between Malaysia-based CIMB has deployed Reval in place of its original continued... © Page 5 9th June 2010
  6. 6. NEWS www.islamicfinancenews.comcontinued... in Islamic financing. The entire issuance was of the proposed merger between Tamweel to raise US$6.5 billion last year. and Amlak Finance.committee member Dr Jasim Al-Ajmi, thischallenge involved whom the board reportsto, level of transparency and the amount Deal closed Islamic branchof information disclosed by the Shariah KUWAIT: Global Investment House and Gulf QATAR: HSBC has decided to open a fullysupervisory board. Bank have signed a MoU where the bank will fledged Islamic banking branch in the act as a sales agent for selected investment country. The establishment of more branchesAl-Ajmi added that conflict will always arise funds managed by the former. is to follow based on an assessmentbetween Shariah and performance because conducted to identify demand in the sector.compliance could be regarded as a cost by The agreement will see Gulf Bank offeringthe management. its priority banking clients the opportunity to The new HSBC Amanah branch will be invest in the Global GCC Large Cap Fund and opened in Doha and will cater to all theRiba defined Global GCC Islamic Fund. Shariah compliant financial requirements of its customers.GLOBAL: Shariah scholars have agreed onthe importance of setting up a committee to New in the marketcharacterize the definition of riba and when UAE: Sharjah Islamic Bank launched a new Sukuk financingit is allowed. Shariah-based ‘Employee Payment’ program, SAUDI ARABIA: Ahmed Salem Bugshan targeting companies and employees. Group (ASB Group) is preparing to raise anThis was concluded during a recent Islamic Ijarah-based US$100 million through theworkshop where different schools of thought The product provides salary transfer issuance of Sukuk.highlighted that riba, though prohibited in services, which is based on the country’sgeneral in Islamic finance, can be allowed in The Sukuk is being structured with a five payment protection laws.some cases. year-term maturing in 2016 and offering a semi-annual return of 125 basis points over New Shariah fund the US dollar, six- month London InterbankMIDDLE EAST KUWAIT: The National Bank of Kuwait Offered Rate. launched the US dollar-denominated Thahabi Proceeds from the Sukuk will be used toGoing local Ijara Fund VI. fund the expansion of its existing projectsQATAR: The country has issued QAR10 billion including a mega-steel plant and a real(US$2.8 billion) in local bonds made up of The fund will invest all of its assets in the estate project.conventional and Ijarah-based Sukuk with a purchase of equipment or portfolios of6.5% coupon rate. equipment, and lease this equipment to a diverse range of tenants. Whitepaper on mortgageThe riyal-based bonds provide a channel to This fund comes with a four-week subscription SAUDI ARABIA: Shariah compliant Capitaspool excess liquidity in the banking sector period, which started on the 6th June. Group International, an affiliate of the Islamicand diversify its funding away from dollars. Corporation for the Development of theTo date, government debt issues have been Private Sector has released a whitepaper —predominantly US dollar-denominated. No change “Expanding the Saudi Mortgage Market: TheThe eight-year issue is evenly split with five Path to Homeownership.” UAE: Islamic mortgage finance firm Tamweellocal conventional banks getting QAR1 billion continues to work on a restructuring plan(US$275 million) each, while four Islamic The whitepaper highlights the key stages with Amlak Finance, led by a steering of development in the mortgage industry,banks share the rest. committee, which is appointed by the federal examines the role that mortgage liquidity government. centers have played in other emergingSituation report Tamweel’s statement comes in response markets, and outlines solutions for Saudi Arabia.UAE: The Dubai government will meet to Dubai Islamic Bank’s announcementwith European investors to update them last week that it was evaluating a potentialon current economic developments in the increasing in its stake in the mortage New changescountry. company. UAE: Abu Dhabi Islamic Bank has unveiledDubai’s department of finance said the The restructuring scenario that had been its new brand identity and introduced a newmeeting will not be used to promote bonds discussed until recently was the merger of slogan.but will be a continuation of the investor the two firms to establish an Islamic bankupdate program launched last year. that would receive the financial support of The new brand identity brings to the fore the government. its core values. These values are — simpleAs part of its debt restructuring plans, the and sensible, transparency, mutual benefit,Emirates was successful in raising US$4 bil- According to analysts, the new developments hospitality and tolerance and Shariahlion using Islamic bonds and US$2.5 billion added to the ambiguity surrounding the fate inspired. © Page 6 9th June 2010
  7. 7. TAKAFUL NEWS www.islamicfinancenews.comAFRICA The central bank had recently proposed to restructure the policy in line with the vote on the 7th June, unless the price was renegotiated. government’s aim of ensuring access forNew kid on the block motorists to the mandatory Third-Party Bodily Prudential and Bank Simpanan NasionalGHANA: Metropolitan Life Insurance Injury and Death insurance coverage. jointly own the Prudential BSN Takaful firm inlaunched a life insurance and investment Malaysia.scheme, Labaika, targeting the Muslim At the end of 2009, there were 10.8 millioncommunity. It is the first of its kind on the motor insurance and Takaful policies issuedGhanaian market. by insurers and Takaful operators. GLOBALThe insurance holders are entitled to receive Be more prudenta fixed sum should death occur during theterm of the insurance. EUROPE GLOBAL: The GCC’s real estate and mortgage industries need to consider their Pulling the plug Takaful or other insurance-related optionsASIA UK: Prudential had decided to abandon an agreement to buy American International at the earliest stage possible as their future survival depends on it. Group’s (AIG) Asian business after theMore time needed latter’s board voted against cutting the Solidarity General Takaful CompanyMALAYSIA: The Consumers Association of purchase price from US$35.5 billion. general manager Gopi Rao said TakafulSubang and Shah Alam, Selangor has urged and insurance-related buying decisionsthe government to order Bank Negara to The deal came to an end after Prudential’s in this region are mostly made as anpostpone its proposal to restructure the investors signaled that they would not afterthought, which can expose participantsmotor insurance policy. support the AIA purchase in an impending to unnecessary risk. Islamic Finance: Opportunities for Tomorrow 25th - 28th October 2010, Kuala Lumpur The Global Islamic Finance Forum (GIFF) 2010, themed “Islamic Finance: Opportunities for Tomorrow”, is a high-level multi- track event that brings together regulators, scholars and financial industry players who are key drivers in shaping Islamic finance globally. The multi-track events of GIFF 2010 includes a Global Business Leaders Dialogue, Public Lecture, Regulators Forum, Media Engagement Programme, the IFN Issuers and Investors Asia Forum 2010 by REDmoney, International Shari’ah Scholars Forum by ISRA, Global Islamic Liquidity Management Workshop by AIBIM and The Takaful Rendezvous by MTA. Sponsors for IFN Asia Forum 2010 Lead Sponsors Associate Sponsors UK Pavilion Sponsors Research Partner Technology Partner Booth Sponsors Takaful Associate For further information on GIFF 2010 or to register, please visit © Page 7 9th June 2010
  8. 8. RATING NEWS www.islamicfinancenews.comASIA The ratings were attributed to the announcement that its holding company, Good financials American International Group has terminated SAUDI ARABIA: S&P hasTriple strength its agreement with Prudential to acquire the revised its outlook on The Saudi AIA Group. Investment Bank to stable from MALAYSIA: RAM Rating negative. Services (RAM) has reaffirmed the enhanced AIA owns a Takaful subsidiary in Malaysia. At the same time, S&P has affirmed the ‘A- long-term rating of ‘AA1’ /A-2’ long and short-term counterparty creditfor AEON Credit Service’s RM400 million(US$122 million) conventional and Islamic Stellar performance ratings on the bank. The outlook is attributed to the bank’s resilient financial profile.Commercial Papers/Medium-Term Notes MALAYSIA: Standard & Poor’s(CP/MTN) Program, with a stable outlook. Ratings Services (S&P) has The Saudi Investment Bank provides Islamic assigned a long-term foreign banking products.The rating is attributed to the strength of currency issue rating of ‘A-’ onthe guarantee extended by a consortium of Malaysia’s US$1.25 billion globalthree banks — The Bank of Tokyo-Mitsubishi Sukuk trust certificates. Strong bondUFJ, Mizuho Corporate Bank, and MalayanBanking. The rating is based on the final offering BAHRAIN: Fitch Ratings agreement dated the 27th May 2010, and (Fitch) has assigned a long- the various agreements, undertakings term foreign currency IssuerImproved rating and the declaration of trust the 31st May Default Rating (IDR) of ‘A’ 2010. on Mumtalakat Holding Company, with a MALAYSIA: RAM has revised stable outlook. the rating of Senai-Desaru Expressway’s RM1.46 million Brilliant performance Fitch has also assigned Mumtalakat’s senior (US$445,000) Bai Bithaman Ajil unsecured ratings of ‘A’ and a short-term IDR Islamic Debt Securities (BaIDS) to MALAYSIA: RAM has of ‘F1’. The firm’s ratings are aligned with‘BBB3’ (Negative Rating Watch). reaffirmed Public Islamic Bahrain’s (‘A’/Stable/’F1’), reflecting the Bank’s respective long- strong relationship between the two.At present, Senai-Desaru Expressway is and short-term financialworking on restructuring the BaIDS, with institution ratings at ‘AAA’ and ‘P1’. The long-its appointed financial advisor, Maybank term rating has a stable outlook. Double slideInvestment Bank. RAM has also reaffirmed its parent — Public UAE: Moody’s Investors Services Bank’s long- and short-term financial has downgraded the local andParental support institution ratings at ‘AAA’ and ‘P1’ foreign currency deposit ratings respectively. of Dubai Bank to ‘Baa2’/’Prime-3’ MALAYSIA: RAM Rating from ‘A3’/’Prime-2’. Services (RAM) has The Public Islamic Bank ratings are reaffirmed the ‘P1’ rating attributed to the bank’s credit profile, which At the same time, Moody’s has downgraded of Esso Malaysia’s RM300 mirrors that of its parent — Public Bank. Dubai Bank’s bank financial strength ratingmillion (US$90 million) Islamic Commercial to ‘E+’ from ‘D’. The ratings carry a negativePapers Issuance Facility Program. outlook.The rating is supported by the strong MIDDLE EAST The downgrade hinges on the materialfinancial flexibility of its parent company — weakening in Dubai Bank’s standaloneExxon Mobil Corporation. Standing firm strength as a result of the ongoing credit issues UAE: RAM has assigned surrounding the Dubai corporate sector. respective long- and short-In tip-top condition term financial institution HONG KONG: S&P has ratings of ‘AAA’ and ‘P1’ to affirmed its ‘A+’ local National Bank of Abu Dhabi (NBAD). currency counterparty Too many pieces At the same time, the bank’s proposed credit and insurer financialstrength ratings on American International US$916 million of Senior Unsecured Islamic/ in the puzzle?Assurance Company (AIA) and American conventional Medium-Term Notes programInternational Assurance Company has been assigned a long-term issue rating Let IFN put it together for you…(Bermuda). of ‘AAA’. All the long-term ratings have a stable outlook. SUBSCRIBE TOS&P had also removed them from The ‘AAA’ ratings are attributed to the bank’s IFN TODAYCreditWatch, where they were placed withdeveloping implications. The outlooks are solid shareholder support and NBAD’s strong www.IslamicFinanceNews.comdeveloping. franchise in its domestic financial market. © Page 8 9th June 2010
  9. 9. IFN REPORT www.islamicfinancenews.comFirst US fund manager Eager for Islamic investorsMALAYSIA: US fund manager Saturna Capital Corporation was granted KAZAKHSTAN: The financial crisis that hit Kazakhstan’s banks hasan Islamic fund management license by the Securities Commission made the nation look for alternative models of finance and economic(SC) in May, setting a precedent in two ways. First, a US fund manager growth. Four of the nation’s 38 banks are currently working towardswas granted an Islamic fund management license in Malaysia. restructuring about US$20 billion of debt. Of its 16.5 million people,Secondly, the method entailed an existing asset management 60% are Muslim and are slowly rediscovering their roots after a longcompany being converted into an Islamic one for the first time. period of religious suppression under the Soviet regime.Saturna in fact bought over Alpha Asset Management which was not Kazakhstan is rich with fossil fuel reserves, minerals, metals, a largeIslamic, but it held a conventional fund management license. Saturna agricultural sector featuring livestock and grain. Its industrial sectorthen converted Alpha’s conventional assets into Shariah compliant rests on the extraction and processing of these natural resourcesportfolios. The venture was then renamed Saturna. and the country is now engaged in a drive to woo Shariah compliant investments to develop the agriculture, oil and gas, metallurgy,“Alpha Asset Management held a conventional fund management mining, energy and industrial sectors.license at the time Saturna acquired control. Upon acquisition weimmediately contacted existing clients to notify them of our intention The minister of industry and trade and the deputy prime ministerto operate under an Islamic fund management license, and offered of Kazakhstan Aset Issekeshev told Islamic Finance news that thethem the option to continue using our services under an Islamic government has already assured state support for Shariah financialmandate,” said Saturna chief investment officer Bryce Fegley. investments. They have identified the urgency to resurrect these dormant industries with fresh investments sourced using ethical“The focus of our business going forward will be management financing.of individually structured investment portfolios. To that end, theconversion process for our existing clients entailed the restructuring The country began exploring the potential of Islamic finance in 2007.of their individual portfolios to ensure they were Shariah compliant,” The adoption of its maiden laws on Islamic banking and finance inFegley continued. April 2009 followed very quickly with the formation of Fattah Finance in March, the country’s first brokerage specializing in Islamic finance,Affin Fund Management CEO Mohamad Ayob Abu Hassan confirms and Kausar consulting, the first Islamic finance consultancy. Thisthat it is a cumbersome process to convert conventional investments year itself, the much awaited launch of Al Hilal Bank, a joint ventureinto Islamic finance instruments. “The conversion needs investor’s between the government and its UAE counterpart took place. Theapproval regardless of the status — whether they are private country’s first Islamic bank opened two branches in Almaty andplacements or unit trust. Failing such approval, the only available Astana, with another two in the pipeline by the end of the year.option is to refund the respective conventional investments,” he said. “Islamic finance is crucial for economic development and innovations.Approving the Saturna’s move, Al Rajhi Bank vice-president for It has weathered financial crises and is proven for its quality, reliabilityinvestment banking Mabel Lee said: “Internationally the fund markets and the transparency. Having understood the vital role it can play toare volatile and this could prevail for some time. Fund managers attract investments from the Islamic nations, the government hasneed to be opportunistic in this turbulent market condition. So, they extended the state patronage by amending the laws. We are confidentconsider the Asian region as room for growth. However, the Malaysian that Islamic finance will lead the way to attract investments especiallyfund market is relatively small in size but stable. This feature attracts from the GCC and the other Muslim countries to develop all thesenew investments as well as market players to Malaysia.” sectors,” said Issekeshev.Explaining the market dynamics instrumental for its new subsidiary, IFI Consulting Company deputy general manager Sabry KozhakhmetovFegley told Islamic Finance news, that the promising long-term optimistic about Islamic and finance how it could help to attracteconomic fundamentals prevailing in Asia were the deciding factor. investment said: “People waited a long time for the opening of an Islamic bank in Kazakhstan. Now the Shariah based financial system“We source opportunities for making investments both for our clients’ has started to progress in the country. There are a considerableportfolios as well as investing in our own future growth. Malaysia number of Islamic investors willing to invest here. We have workedserves us as a regional hub in terms of Islamic finance due to its closely with the regulators and are confident of the fundamentals.convenient geographical positioning and its relatively liberalized However, it will take time to smooth out the differences and minormarkets and the economy. The country’s strong investor protection transitional issues.”mechanisms and state patronage are additional advantages,” saidFegley. Promoting the available investment opportunities in this 9th largest country in the world, Visor Capital managing director Jose Luiz GaviaoIn addition to asset management, Saturna conducts international said: “In general terms, the economy has survived difficult periodsequity research, investment advisory services, sales and marketing. quite well, with most of the debt restructuring of its financial systemsThrough its subsidiary Saturna, Saturna Capital Corporation plans to already concluded. That was achieved without denting its sovereigntap into Malaysia’s Islamic financial growth and to reap benefits from ratings or imposing heavy toll on local tax payers. The country isthe prevailing investment friendly environment. known for its very conservative approach in terms of fiscal policy, which coupled with better than expected oil prices.”With a strong track record in managing Shariah compliant portfoliosand other international equities, Saturna enjoys 100% market Reports by Arfah Hani Abdullah and Ashwin Hemmathagamaleadership in Islamic fund management in the US. © Page 9 9th June 2010
  10. 10. COUNTRY REPORT Thai SEC To Permit Sukuk Issuance — First Deals Likely To Follow By Stephen Jaggs, Siripen Kaodara and Matthew WaudbyThe Thai Securities and Exchange Commission (SEC) is currently apply for SEC approval by submitting to the SEC an application form,in the process of issuing a new regulation to permit both domestic together with the required corporate documents. The SEC will informand international issuances of Sukuk certificates in accordance with the applicant of the result within seven business days of receiving theIslamic financing principles (the Sukuk Regulation). We have been complete and accurate application form and supporting documents.informed that the new regulation is likely to be issued in around Julythis year. In addition, to facilitate Sukuk issuance, the Thai Ministry This is effectively an application for the approval of the issuer and, onceof Finance (MOF) has prepared a draft regulation to exempt the the SEC grants its approval, the issuer will be considered to have beenoriginator from land transfer taxes and registration fees which is due “shelved” as an issuer with the SEC. As a shelved issuer it may issueto be submitted for cabinet approval shortly. as many series of Sukuk certificates of unlimited value within two years from the date of the SEC approval. However, prior to each issuance,Previously there had been no laws in place to accommodate Sukuk issu- the approved issuer must disclose features of the Sukuk certificatesance in Thailand and no deals had taken place. However, according to and submit certain documentation to the SEC (including transactionalpress reports, the Islamic Bank of Thailand plans to issue Thailand’s first documentation and board of directors’ or shareholders’ approval).Sukuk certificates this year once the new regulations are issued. With aMuslim population of approximately nine million, market sentiment per- Filing requirement: In addition the issuer must file a registrationmitting, there are hopes that the new regulations will enable Thailand statement and draft prospectus with the SEC prior to each take the first steps towards developing into an Islamic finance hub, The Issuer and a financial advisor must jointly prepare and certifyenabling it to draw capital from the Middle East and elsewhere. the accuracy of information in the registration statement and draft prospectus, except where (i) the issuer is a listed company or a legalBased on a draft summary of the Sukuk Regulation previously entity established by special legislation, or (ii) the Sukuk certificatescirculated by the SEC in late 2009 and other publicly available are short-term certificates. An offer can only be made after the filinginformation, this article seeks to assess the general legal framework becomes effective, which is 14 days after the date the SEC receives thefor Sukuk issuance in Thailand by analyzing the likely key provisions complete registration statement and draft prospectus. Except whereof the Sukuk Regulation and related laws. Please note however that (i) the issuer is a listed company or a legal entity established by specialthe final version of the Sukuk Regulation may well feature certain legislation, or (ii) the Sukuk certificates are short-term certificates.amendments to the previously circulated draft summary. It is possiblethat the details summarized below may be subject to change as may Rating requirement: The Sukuk certificates must be rated. If thethe timing of issue of the finalized regulation. certificates are short-term with a maturity period of 270 days or less, the SEC may permit the issuer to use an additional issuer rating.Sukuk RegulationThe Sukuk Regulation will essentially seek to set out what Sukuk Trustees: For each issuance of Sukuk certificates, the SEC requiresstructures are permitted, together with the applicable SEC approval the appointment of: (i) an asset trustee, which will hold the underlyingand filing requirements. The latter will essentially dictate which entities assets and issue the Sukuk certificates; and (ii) a Sukuk trustee, whichcan issue Sukuk certificates and in what circumstances. will be appointed to represent the investors. The trustees must be separate entities to ensure that there are no conflicts of interest.Permissible Sukuk structuresInitially, the SEC will permit the issuance of Sukuk certificates under • Asset Trustee: The asset trustee may be the originator orfive popular types of structure, namely: Ijarah (leasing), Istisna (custom a subsidiary of the originator. The asset trustee will bemanufacturing), Mudarabah (cost-plus financing), Musharakah responsible for issuing Sukuk certificates, buying, holding(partnership) and Wakalah (agency). The Sukuk certificates must be and selling the underlying assets. The asset trustee mustunsecured, unsubordinated, with a definite term such as not perpetual receive permission from the SEC to act as an asset trustee.certificates and must not be convertible. To ensure that Sukuk The asset trustee may only look after assets relating to thecertificates are issued in accordance with Shariah principles, the SEC Sukuk certificates which it issues.requires the structure to be reviewed by a Shariah advisor. • Sukuk Trustee: The Sukuk trustee performs a role similarApproval and filing requirements to that of a bondholders trustee and has a fiduciary duty toIt is anticipated that the Sukuk Regulation will permit both public the investors. The Sukuk trustee must be a licensed trusteeofferings and private placements of Sukuk certificates. Generally, the pursuant to the Trust Act.applicable approval and filing requirements are likely to be similar tothose of the SEC for conventional bonds with the key requirements for Underwriter: Subject to certain exceptions, the issuer must appoint andomestic offerings being as follows: underwriter. (a) Public offerings Listing requirement: The issuer must list the Sukuk certificates withApproval requirement: To be able to go ahead with an issuance, the the Thai Bond Market Association.issuer and, if they are not the same entity, the originator must jointly continued... © Page 10 9th June 2010
  11. 11. COUNTRY REPORT Thai SEC To Permit Sukuk Issuance — First Deals Likely To Follow (continued)Eligible applicants: Importantly, the issuer and originator must be Listing requirement: No listing requirements exist for privateeither a company incorporated in Thailand (which would include a placements except for Sukuk certificates offered to institutionalspecial purpose vehicle (SPV)), a foreign bank with a full branch in investors or high net worth investors which must be listed with theThailand or a legal entity established in Thailand by special legislation. Thai Bond Market Association.The SEC’s requirement that any SPV issuer be incorporated in Thailandmeans that foreign investors will be unable to seek to reduce their Eligible applicants: Eligible applicants for private placements are thecountry exposure through the use of an offshore SPV issuer. Though same as for public offerings.typically one may expect the issuer to be an SPV, the Sukuk Regulationalso contemplates that the issuer may be either the originator or an International versus Domestic IssuancesSPV. The above summary is drafted from the perspective of domestic issuances. The main difference for an issue to offshore investors is (b) Private Placements likely to be that there will be no filing requirement (the issuer wouldUnder the Sukuk Regulation it is anticipated that a private placement merely have to apply for SEC approval and the criteria for approval arewill be defined as: likely to be less stringent than for domestic issuances). In addition the general approach is likely to be that domestic deals would need to be • an offer to institutional investors or high net worth investors denominated in Thai Baht, whereas foreign deals would need to be of unlimited value, denominated in a foreign currency. • an offer to not more than 10 specific investors during any four- Other Key Thai Laws month period, or Proposed tax and registration fee exemptions Potential market participants have previously commented that the Thai • an offer for which special waiver is granted by the SEC. tax code has hindered the development of Islamic finance in Thailand, pointing out that: (i) returns from Sukuk investments are classified asInstitutional investors are usually defined by the SEC as commercial rental revenues subject to a property tax; and (ii) transfers of land orbanks, finance companies, securities companies, credit foncier property assets to a SPV are taxed as a land transaction. In this regardcompanies, insurance companies, state enterprises, governmentalagencies, legal entities incorporated by specific legislation, the Bank the exemption from land transfer taxes and registration fees proposedof Thailand, international financial institutions, the Financial Institution by the MOF may further facilitate transactions.Development Fund, the Government Pension Fund, the ProvidentFund, mutual funds and similar types of foreign investors. A high net The Trust Actworth investor is likely to be defined as an individual having assets The other key Thai law that will combine with the Sukuk Regulation toworth THB40 million (US$1.22 million) or more (excluding debts) or a facilitate Sukuk issuance in Thailand is the Act on Trusts for Capitallegal entity having assets worth THB200 million (US$6.12 million) or Market Transactions (the Trust Act). This was enacted in 2007 andmore according to its most recent audited financial statements. crucially allows for the concept of an asset trustee and a Sukuk trustee in a civil law system which previously had no ‘trust’ concept.Approval requirement: The issuer and the originator will not be requiredto submit an application for approval but will instead likely be deemed Conclusionsto have received SEC approval once the issuer: (i) registers the transfer The anticipated SEC permission to issue Sukuk certificates, togetherrestriction applicable to an issuance with the SEC; and (ii) submits to with the MOF’s proposed exemptions from land transfer taxes andthe SEC the draft terms and conditions and trustee agreement. Note registration fees, are likely to be very encouraging. By removing keythat prior to each issuance, the approved issuer must disclose features impediments, they may well enable Thailand to take its first steps intoof the Sukuk certificates and submit certain documents to the SEC. the vast Islamic finance market. Indeed press reports suggest that in the coming months the Islamic Bank of Thailand plans to issue a BahtFiling requirement: There is no filing requirement for private denominated Sukuk adopting a Wakalah structure with an issue sizeplacements other than for offerings to institutional investors or high in the region of THB5 billion (US$153 million).net worth investors, in which case the issuer must file with the SECa certified registration statement and draft prospectus. The filing Stephen Jaggseffective date is five business days after the date the SEC receives the Partnercomplete registration statement and draft prospectus. Allen & Overy (Thailand) Email: Stephen.Jaggs@bangkok.allenovery.comRating requirement: There is no rating requirement for privateplacements except for offers to institutional investors or high net worth Siripen Kaodarainvestors, in which case, either the Sukuk certificates or the issuer Senior associatemust be rated. Allen & Overy (Thailand) Email: Siripen.Kaodara@bangkok.allenovery.comTrustees: The same principles apply in respect of trustees as for publicofferings. Matthew Waudby Senior associateUnderwriter: An underwriter is not required to be appointed for private Allen & Overy (Thailand)placements. Email: © Page 11 9th June 2010
  12. 12. SECTOR REPORT The Role of Venture Capital Model in an Islamic Economic System By Kashif NisarSince their inception, Islamic banks have been criticized for not falls on the shoulders of leading Islamic banks to take the lead andusing participatory (profit and loss sharing) modes of financing such promote participatory financing modes wherever Musharakah and Mudarabah. Generally, scholars argue thatparticipatory financing is the key to achieve the main goal of equitable Overall, the combination of the ‘trust’ factor of depositors, ‘return’distribution of wealth in society. There has been little progress in this expectation from shareholders and strict regulatory control make itarea and Islamic banks still heavily rely on less risky financing modes difficult for the management of an Islamic commercial bank to have asuch as Murabahah and Ijarah. Hence there is a need to revisit the large portfolio based on participatory modes. This is exactly where thewhole process to find out whether the criticism of Islamic banks venture capital model justified and whether the ‘current commercial Islamic bankingmodel’ can alone achieve an equitable distribution of wealth. “There is a need to revisitAny person would feel reluctant before handing over his life savingsand expensive belongings to another individual for safe keeping. The the whole process to find outreason for such reluctance is the ‘trust’ factor as it is possible thatthe person responsible for safekeeping may not return the belongings whether the criticism of Islamicback to the actual owner. But when we talk about the commercialbanking model, the same owner would readily deposit his funds and banks is justified and whetherkeep his belongings in lockers with a bank and would feel very secureafter doing so. The commercial banking model exists on the basis the ‘current commercial Islamicof ‘trust’. A depositor may have opened an account to avail certainbanking services or to earn periodical profit on his funds. But in either banking model’ can alonecase, he trusts the bank to prudently manage his funds and ensure achieve an equitable distributionthat his principal funds remain intact. Imagine a depositor entering inan Islamic bank branch to withdraw part of his funds. He is, however, of wealth”informed at the cash counter that out of the total PKR500,000(US$6,000) deposited by him only PKR300,000 (US$3,512) were Venture capital is a type of private equity capital mainly providedavailable in the account due to the default of a corporate client, with for early-stage, high-potential, growth companies in the interest ofwhom the Islamic bank had entered into a Musharakah transaction. generating a return through an eventual realization event such as buy out or initial public offering. In such a model, there is an inherent riskIn spite of signing the Mudarabah contract at the time of account of losing one’s entire investment in a startup company. In other words,opening and knowing about the possibility of loss in Mudarabah, it the investor in venture capital may accept failure of six out of sevenis much likely that the depositor may not accept such loss. He may transactions. But the depositors and shareholders of an Islamic bankquestion the prudence and risk management exercised by the Islamic have a limited risk while investing his funds. He may even doubt the integrity of thatIslamic bank and feel that the bank is deceiving him. Once the trust Venture capital can be used as a tool for economic development inlevel is shaken, the existence of that Islamic bank may be in jeopardy developing regions. It contributes to the economy as follows:as other depositors may also approach the bank for withdrawal of their • Venture capital is most attractive for new companies with limitedfunds. operating history that are too small to raise capital in the public markets and have not reached the point where they are able toSimilarly, the shareholders would generally expect the bank to perform avail financing from banks;better or at least at par with other competitor banks. They would have a • Technology advancement;certain expected return in mind as they have invested large amounts of • Increase in job creation and innovation in an economy. We havefunds and may also look towards alternative investment opportunities examples of highly successful companies originated by Venturein case the Islamic banks fail to provide the desired return. So there is capitalists such as Google, Amazon, Apple Computer, Intel, FedExa dilemma for the Islamic banks. The fund providers (depositors and and Microsoft.equity holders) are generally risk averse, whereas, other stakeholdersexpect Islamic banks to deploy funds in participatory modes of finance It was initially in the US that venture capital originated as an industry.which are riskier in nature. Accordingly the US venture capital companies have been the major participants in venture investments. Venture capital investments laterTherefore, the criticism that Islamic banks are not investing the increased in other regions such as Europe, Canada, China, Malaysia,majority of their funds in participatory modes seems unfair. But, as is India, Thailand and such.always the case, any extreme position taken is wrong. On one hand, itis unrealistic to expect an Islamic bank to base the majority of its asset The venture capital model works in a region when there are someportfolio on participatory modes. On the other hand, it is disappointing initial success stories. For example, in the case of China, the ventureto see that, apart from a few players, there have been no visible efforts capital industry started in the 1980s. Initial efforts failed due to lack ofto utilize these modes even in a gradual manner. Major responsibility continued... © Page 12 9th June 2010
  13. 13. SECTOR REPORT The Role of Venture Capital Model in an Islamic Economic System (continued)experience in this area. However, due to continuous support from the financing whereas the manager/entrepreneur will propose a businessChinese government as well as from the private sector, the industry venture and will be responsible for the management and work. As pertook off from 1999 onwards. the Mudarabah principles, the parties will have to agree in the contract on the proportion of the actual profit arising from the business venture.As with China, the venture capital industry in Pakistan has witnessed Loss in the venture will have to be borne by the investors unlesssluggish development. One of the venture capitals, Pakistan Venture the loss is caused due to the negligence or violation of the contractCapital, had to shift from the venture capital model due to portfolio terms by the entrepreneur. In the Islamic venture capital company,issues and problems created by the local loan recovery procedures. a Shariah Advisor should be appointed who will provide guidance onIn 2000, the government launched a US$50 million venture capital conformance to the Shariah principles in all matters and will ensurefund for technology development in Pakistan, but no notable progress that the proposed investment contract and instrument structures arewas achieved and the initiative soon fizzled out. Steady support from Shariah compliant.the government and private sector is required to make the venturecapital model a success since many high-potential projects in different The Malaysian government is playing a major role in this area and issectors such as energy, agricultural and health remain untapped due encouraging Islamic venture capital firms to establish bases in theto lack of funding. The government needs to facilitate the venture country. In this regard, the Securities Commission of Malaysia hascapital industry through different measures to ensure its success. The already introduced a set of guidelines and best practices to promotecritical issues include development of an adequate legal framework, the adoption of appropriate standards for the development of thean easy entry and exit mechanism, necessary relaxations in the Islamic venture capital industry. It is expected that other regions,regulatory framework and promoting innovative ideas and potential specifically where Islamic banking is growing rapidly, will follow suitentrepreneurs. The government can also play a major role by creating and promote the Islamic venture capital industry. The Islamic ventureits own venture capital fund. capital model can provide ideal support to Islamic banks in achieving the vision of equitable distribution of wealth in the economy.Venture capital is a mode of investing that seems ideal for Islamicfinance through the application of participatory financing modes Kashif Nisarwith the Mudarabah concept being the most common. In the Islamic Section head, product and business developmentventure capital model, Mudarabah financing will involve a partnership BankIslami Pakistan Limitedcontract under which the investor (or ‘Rab-ul-maal’) will provide Email: To participate in this prestigious event contact: | t:+971 4 343 1200 | f:+971 4 343 6003 | P.O. Box 72045, Dubai | Islamic Financial Services Associate ETF Partner 1st Annual Innovation Partner Knowledge Partner Fund Management Partner Investment Management Partner 14 & 15 June 2010, Swissôtel The Stamford, Singapore Index Partner Dispute Resolution Partner Keynote Speakers at WIBC 2010: Asia Summit Technology Partner & Conference Shari’ah Advisory Partner Luncheon Host Day 2 H.E. Lim Hng Kiang H.E. Rasheed M. Al Maraj H.E. Sultan Bin Nasser Al Suwaidi Minister for Trade and Industry, Singapore Governor Governor Gold Strategic Partners Silver Strategic Partners & Deputy Chairman Central Bank of Bahrain Central Bank of the UAE Monetary Authority of Singapore Seeking New Growth Horizons WIBC 2010: Asia Summit Supported by Associate Exhibitors Platinum Strategic Partner Leadership Partner & Platinum Strategic Partners & Gala Dinner Host Conference Luncheon Host Corporate Exhibitors Bronze Partner Lanyard Sponsor WIBC Asia is a MEGA Brand MEGA Brands. MEGA Clients. Market Leaders. Shaping the Future of the Islamic Finance Industry Since 1993 Official Islamic Publication To participate in this prestigious event contact: | t:+971 4 343 1200 | f:+971 4 343 6003 | P.O. Box 72045, Dubai | © Page 13 9th June 2010