Saudi Arabia's Itqan Capital, an Islamic investment firm, plans to develop a sharia-compliant brokerage arm and is nearing the launch of a $200 million education private equity fund, its chief executive told Reuters.

Investment firms in the kingdom are poised to see an uptick in activity as the Saudi stock exchange, the Arab world's biggest, is set to open to direct investment by foreign institutions in June.

The firm is building its capability as the asset and wealth management arm of Bahrain's Al Baraka Banking Group, which operates in 15 countries, said Adil Dahlawi, managing director and chief executive of Itqan Capital.

The new business will be developed as a joint venture with Bahrain-based brokerage Mubasher Financial Service, and would use the branch network of Al Baraka to launch in an initial five countries including Turkey and South Africa, Dahlawi said.

"We plan to soft launch within a few months and launching in those markets may take between six to 12 months," said Dahlawi, adding that the shareholding structure of the venture had yet to be finalised.

Plans include offering sharia-compliant investment services including stock screening, margin trading and derivatives.

Islamic principles ban outright speculation and interest-based lending, with sharia-compliant margin trading usually offered using a cost-plus sale arrangement known as murabaha.

In April of last year, Nasdaq Dubai launched a murabaha trading platform alongside Emirates Islamic Bank.

Itqan also plans to launch an education-focused private equity fund and will file for approval with the Saudi regulator by the end of this month, Dahlawi said.

The fund has a target size of SR750 million ($200 million) in capital and will focus on developing a series of greenfield projects in the kingdom. – Reuters