A Gulf Arab consortium aims to set up three Islamic financial firms with total starting capital of $2.8 billion and authorisation to raise up to $10 billion to invest in infrastructure, agriculture and the hospitality industry.

Project leader Gulf Finance House, the Bahraini investment bank, said it would launch an investment bank called InfraCapital to tap an expected $545 billion in infrastructure projects in the world's biggest oil-exporting region.

Bahrain's Ithmaar Bank and Abu Dhabi Investment House would also take part in the venture, which will begin with $1.5 billion in capital and can raise up to $6 billion and seeks to invest in the transport, energy and education sectors.

'The pace of innovation in what is a booming Gulf infrastructure sector cannot be understated,' Mehran Jamsheer, Gulf Finace House deputy chief executive said in the statement.

The Gulf consortium would also set up a $1 billion agricultural investment firm, authorised to raise up to $3 billion and focusing on food production, livestock and biofuels, and a $300 million hospitality fund authorised to raise up to $1 billion to invest in hotels and apartment complexes, they said.

The three firms could have collective authorised capital of up to $10 billion, the companies said.

The announcement comes one month after a Gulf consortium including Gulf Finance said it would set up a $5 billion steelmaking firm to meeting soaring construction demand in the region.

Gulf Arab oil producers are putting investment windfall revenues from a more than five-fold rise in oil prices since 2002 into developing infrastructure, real estate and industry to diversify their economies away from a reliance on oil exports.

The size of the six Gulf economies, including Saudi Arabia and the UAE, will surge past $1 trillion this year on high oil prices, a Reuters poll showed last month.

In May, Gulf Finance, which is also building energy operations in places like Libya, said it would start a $2 billion cement company.

Islamic companies comply with sharia law which bans, among other things, the payment or receipt of interest.-Reuters