Dubai: Bahrain-based Islamic investment bank Gulf Finance House (GFH) and Abu Dhabi Investment House (ADIH) yesterday announced the launch of two Sharia-compliant crude oil funds that will enable investors to benefit from price movements of crude oil over a two-year investment period.

Both GFH (as lead manager) and ADIH (as co-manager) will be investment managers and placement agents. Hetco Advisory Services UK Limited has advised on the structuring and will provide market research.

"Enhanced Oil Fund I", one of the two closed-end investment funds, is a $100 million private placement offer that seeks to provide investors with quarterly distributions and a targeted total return of 20 per cent over a period of 24 months. This fund provides 90 per cent capital preservation.

'Enhanced Oil Fund II', a higher risk fund with no capital preservation, is a $50 million private placement offer, which seeks to provide investors with quarterly distributions but with a targeted total return of 40 per cent over a period of 24 months.

Both funds have a minimum subscription level of $250,000, with subsequent investments in multiples of $25,000.


The Enhanced Oil Funds, which have already been approved by the Central Bank of Bahrain (CBB), will also be supervised by CBB for adherence to all rules and regulations applicable to mutual funds.

Peter Panayiotou, Dep-uty CEO and Chief Investment Officer of GFH, said: "The launch of the oil funds is the third in a series of planned energy-related initiatives from GFH. The investment bank recently launched a $395 million private placement for the Energy City India project. Last year it successfully raised more than $500 million for its flagship Energy City Qatar project."

Rashad Janahi, Chief Executive Officer of ADIH, said, "The funds will offer investors an opportunity to participate in the oil market through one of the first financially engineered crude oil Islamic investment funds. It is very important for clients of both ADIH and GFH that we offer them the opportunity to participate in investments that are pioneering in their field and fill a gap in the range of Islamic products on offer today.

"Our clients have expressed a strong interest in investing directly in the crude oil market and this product does exactly that."