Rasmala JV eyes mid-market European sukuk
Dubai, October 31, 2013
EIIB-Rasmala, a venture between London-based European Islamic Investment Bank and Dubai's Rasmala Group, plans to widen its range of Islamic investment products with the hope of doubling assets under management over the next two years.
The firm, which was created by EIIB's acquisition of Rasmala in 2012 and now manages over $1 billion in assets, sees growing mid-market opportunities for its Islamic asset management and investment banking business lines, chief executive Zulfi Hydari said on the sidelines of the World Islamic Economic Forum.
By mid-market, the firm means medium-sized customers which may no longer be served by big investment banks that have been cutting back since the global financial crisis.
Since last year, EIIB-Rasmala has launched three Islamic funds including an Islamic leasing fund and a sukuk fund seeded with $25 million of the company's own capital; it plans more launches this year, Hydari said.
"From our point of view it is very important to continue to increase the product range. What we are hearing from investors is 'treat us to more product' - we need more quality teams with managing track records."
In investment banking, the firm is focused on arranging Islamic bonds. "We are talking about sukuk for the mid-market, and the area that excites us the most is sukuk for European credits."
Deal size may range between $75 million to $150 million, which is now an untapped market segment because larger investment banks have shrunk their balance sheets in the wake of the financial crisis and more stringent regulatory controls, Hydari said.
"This trend is not going to stop. Within that there is an opportunity for Islamic finance solution providers to say there is an alternative source of funding which is available and which is cost-effective."
Earlier this month, the firm arranged the first tranche of a $100 million sukuk programme from FWU Group, a Munich-based financial services company.
"We are focused more on the UK simply because we are headquartered here, but having said that we did a German issuance, so there is an opportunity Europe-wide."
The first tranche of FWU's sukuk programme, rated BBB- by Fitch, carried a profit rate of 7 percent, an appealing pricing for both issuers and investors, said Hydari.
"We've been trying to prove that model for more than a year, so to be able to get a European credit into the market that was oversubscribed for us has proven the concept.-Reuters