Tharawat to raise $100m for sukuk fund
Manama, September 8, 2009
Bahrain-based Islamic investment house Tharawat said it plans to raise $100 million by year-end for a sukuk fund it recently launched to snatch up bargains on the secondary market.
Tharawat chief executive Arif Moh'd Al Alawi also told Reuters on Monday that Tharawat expected to raise $200 million for the open-ended fund targeting individuals and institutional investors over the next two years.
Sukuks have typicallly been bought up and held until maturity by banks, preventing individual investors from accessing that market.
The market was badly hit by the global liquidity freeze last year, but a number of sovereigns and state-affiliated institutions have come to the market in recent months, fuelling hopes that private-sector sukuk issuers will follow suit.
Al Alawi said large financial institutions have exited the sukuk market to free up liquidity and sukuk could be bought on the secondary market at discounts of 20-40 per cent.
"This will not last long as the economies are getting better, within a year the margins on the discounts will shrink," he said.
Investors in the Gulf Arab region are also looking for new asset classes besides equities and battered real estate markets, and several banks have recently launched or are planning to launch sukuk funds, which will add depth to the market.
Al Alawi said the Gulf Arab market for investment products remained difficult, with investors reluctant to move out of the cash they fled into when the global financial crisis reached the region late last year.
"Investors need to see a tangible project (to invest in), rather then a private placement memorandum passing around," he said.
Earlier this week, Tharawat announced its first investment in establishing a $32 million company to produce water filters for the Gulf's increasing fresh water needs alongside Inovest.
Al Alawi said the company planned to make an investment in the health care sector by year-end, declining to provide detail.
Tharawat was established in July 2008 with a paid-up capital of $33 million.-Reuters