Business | Banking

No fund crunch in region's Islamic financial services

Al Baraka to launch $200m bond sale

  • By Babu Das Augustine, Deputy Business Editor
  • Published: 00:00 September 23, 2010
  • Gulf News

Dubai: Islamic institutions in the region have adequate funding avenues despite the financial crisis, said Adnan Ahmad Yousuf, chief executive of Al Baraka Group in Dubai Wednesday.

"The sukuk market is open for longer term funding while there are enough avenues for Murabaha fundings in the region. Al Baraka Group's assets grew more than 15 per cent during the first half of this year," said Yousuf.

Al Baraka will launch a $200 million (Dh734 million) Islamic bond sale this year to fund expansion in France, its chief executive said. Proceeds from the sukuk will be used to set up branches in France, Yousuf said on the sidelines of a conference on media impact on the Arab banking and financial sectors yesterday.

"We are thinking to expand in France next year. The number of branches will not exceed five. It is the right time to open subsidiaries in Europe. The sukuk will be issued by the end of the year, maybe December," Yousuf said.

Acquisitions

Deutsche Bank and Standard Chartered have been named advisers to the issue, and Yousuf said the bank has plans to expand operations in Malaysia and Indonesia through acquisitions.

In August, the Turkish subsidiary of Al Baraka mandated banks for a $250 million Sharia-compliant facility.

"The issue was was 1.5 times oversubscribed. Appetite will come from local and international investors," Yousuf said.

Yousuf said there is growing interest in sukuk issuance from Turkey and Dubai with a mix of corporate and sovereign issues tapping the market in the near future. "There will be a sovereign borrowing, I think that Bahrain is interested, and I believe also Dubai has the interest to issue sovereign sukuk," he said.

Along with the revival of the sukuk market analysts expect a revival in the fortunes of the Sharia-compliant investment banks.

"A potential rebirth of this sub-sector is likely to take a different form from the pre-crisis model. Moody's believes that this concept could re-emerge in the form of specialised business lines of larger Islamic banking groups seeking to diversify, said Anouar Hassoune, Vice President - Senior Credit Officer in Moody's Financial Institutions Group.

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