Sedco Capital plans Islamic equity, funds
Riyadh, April 3, 2013
Jeddah-based investment firm Sedco Capital aims to expand its range of Islamic funds to more than 15 by year-end, a sign of improving financial market sentiment and changing investor attitudes in Saudi Arabia.
The plan adds momentum to the Gulf's Islamic funds industry, which has been hurt by the global financial crisis but is now attracting regional firms such as Qatar's QInvest, which aims to launch 30 funds.
Sedco Capital, a fully owned subsidiary of Sedco Holding, intends to raise assets under management on its Luxembourg fund platform to $1.6 billion by year-end from $1 billion now, said chief executive Hasan Aljabri.
"We plan to expand our range of asset classes and will be introducing products in commodities, real estate and private equities," Aljabri said. "We have definitely seen growth in asset management companies setting up in Saudi Arabia."
Saudi-based firms Aljazira Capital, Alkhabeer Capital, KSB Capital, MEFIC Capital, Al Rajhi Capital and Alawwal Capital launched Islamic funds in 2012.
Sedco Capital now has seven Islamic funds in Luxembourg, Aljabri said. In May and July last year, it launched five Islamic funds including a rare REITs (Real Estate Investment Trusts) fund, which invests in income properties that are listed on stock exchanges around the world.
Product demand is being fuelled by Saudi investors' increasing interest in sukuk (Islamic bonds), Aljabri said.
Last month, the firm launched an Islamic fixed income fund with an initial $100 million alongside an Islamic global equity fund with $150 million, both using Credit Suisse as investment manager.
The fixed income fund invests in Islamic money market instruments, with up to 40 percent of its assets in sukuk. The sukuk can be southeast Asian as well as Gulf issues, a rare mandate because Gulf-based sharia scholars have traditionally shunned sukuk from Malaysia, a major Islamic finance market.
Some Gulf scholars argue that the way in which some sukuk are traded in Malaysia is at odds with Islamic principles, which ban monetary speculation.
However, Gulf scholars have also approved products that are just as contentious; Saudi Arabia is one of the largest markets for commodity murabaha, a common cost-plus-profit arrangement which is criticised as not being sufficiently based on real economic activity, another Islamic principle.
In order to provide a unified view of sharia compliance, the Sedco Capital funds are approved by a panel of three religious scholars from Malaysia, Bahrain and Saudi Arabia, Aljabri said. - Reuters