Saudi Arabia-based Sidra Capital, a Shariah compliant financial services company and Swiss-regulated Inoks Capital SA, an investment house, announced that investments in various transactions by its jointly managed fund reached $13.5 million.

Inoks Capital SA is specialised in commodities financing in emerging markets and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

The joint Sidra Ancile Global Structured Trade Finance Fund (STFIF), which was regulated under both the CMA and the Commission de Surveillance du Secteur Financier (CSSF) of Luxembourg closed its first offering of subscription in September and have since approved investments in various transactions for its current assets under management.

A total of $13 million was already invested in a couple of syndicated transactions, amongst other to finance the production of seed cotton and cotton lint for the export market which were originated from Burkina Faso and Ghana via the Islamic structure of Istis’na.

In both transactions, Sidra acted as the Investment and shari’ah advisor whilst Inoks was the investment manager.

The other transactions were importation of poultry into GCC from Brazil and global trading (origination and distribution) of rice and coal.  The investments in both transactions were also made Islamically, namely Murabaha or Mudaraba or a combination of both structures, a statement said.

Hani Othman Baothman, MD & CEO of Sidra said, “This fund is unique in every sense and is the first to be offered in the KSA.  It targets to invest in the investment space, which was left underserved by larger mainstream banks for various reasons including recapitalisation exercise and higher capital charge for such transaction under the BASEL III requirements.”

“We saw the opportunity and we capitalised on it through this fund, which is managed jointly by our partner, Inoks.  We look to gradually increase our asset under management in the coming years.”

The fund targets to focus in the emerging market for its investment activities.

Nabil M Abdul-Massih, MD of Inoks said: “BASEL III concerns aside, the sector has traditionally been underinvested for lack of know-how and due to the management costs wrongly assimilated with servicing SMEs’ financing requirements.”

“This neglect finds no economical justification but is solely resulting from the structural inefficiencies that banks have with understanding the SMEs businesses’ needs and dynamics and subsequently, to meet them with the proper and tailored financing solutions. As we see it, there is a perfect natural match between Islamic commodity financing structures’ requirements and the way one shall approach providing solutions to growing SMEs in emerging markets.”

“The strategy allows investors to profit from efficiently providing to real tangible commodities based businesses the fuel required to purposely and successfully feed their short term and midterm growths,” he added. – TradeArabia News Service