Saudi Aramco IPO may more than Quadruple Islamic Finance Industry Size.
Current estimates of the size of the global Islamic finance industry range from $1.66 trillion to $2.1 trillion. Recent announcements from Saudi Aramco may be about to give these numbers a supersized boost with a potential valuation and IPO of up to $10 trillion.
“We have seen more maturity in private equity in recent years with sellers better understanding the value these transactions can bring beyond just capital raising. They also view it as a preferable option to IPOs [initial public offerings].
The Malaysian government plans to roll out a new sharia-compliant investment platform next year, aiming to broaden the traditional role of Islamic banks from credit provider to investment intermediary. The government is backing the Investment Account Platform (IAP) with an initial start-up fund of 150 million ringgit ($45 million), intending that the IAP will serve as a central marketplace to finance small and medium-sized businesses.
As Dubai aspires to become the global hub for Islamic economy, Islamic banking and Islamic capital markets are expected to grow simultaneously, said Adnan Chilwan, CEO of Dubai Islamic Bank. Clearly Islamic capital markets are relatively new phenomena. Earlier it was much simpler that if someone needed finance they would go to a bank and the bank would leverage its balance sheet and give a loan. Then it started becoming a little more sophisticated by many banks joining in together to do a syndicated deals. Then a stage came where banks started to participate in cross border deals.
Persian Gulf government spending will help drive what may be a record year for Islamic bond sales,Fitch Ratings said, echoing HSBC Holdings Plc (HSBA) forecasts.
Sales will probably match the 2012 high, the rating company said in a note last week even amid the slowest start to issuance since 2010. Mohammed Dawood, global head of sukuk financing at HSBC, said last month that sales will rebound from a decline last year. Borrowers sold $133 million of syndicated sukuk to Jan. 19, the least since $47 million in the same period four years ago, according to data compiled by Bloomberg.
Melbourne-based First Guardian plans to launch an Islamic pension fund in January, collaborating with some of Australia’s most well-known Muslim organisations to tap the country’s $1.5 trillion private pension system, the world’s fourth largest.
The fund has received regulatory approval and documentation is in the final stages, said Almir Colan, director at the Australian Centre for Islamic Finance who worked with First Guardian in the design of the product.
Islamic mutual funds are emerging from a shakeout that has seen 105 of them close since 2011, and the departures of small and struggling managers will benefit the funds that remain, according to a study released on Tuesday.
The last few years have been difficult for Islamic funds, with firms pulling out as they were hurt by the global financial crisis and as slumping equity markets reduced investor interest.
The top ten GCC banks are among the fastest growing globally, led by QNB Group. They are likely to remain well insulated from the current turmoil in emerging markets (EM) as their growth momentum is underpinned by strong economic fundamentals in the region: High revenue from hydrocarbon exports; positive net foreign asset positions; strong support for the banking system; and large government spending on infrastructure.
It seems that the rapid success of Islamic banking in Switzerland has slowed down. A few years ago, Islamic financial products were considered the biggest potential market for the financial sector. International banks were rubbing their hands at the prospect of the large influx of money from Muslim clients who wanted to invest their money according to Islamic law.
Accordingly, Swiss banks decided to join the party. Both UBS and Credit Suisse launched investment funds guaranteeing customers they are fully compliant with Sharia (Islamic law).
A fund management venture set up in Dubai this month is taking aim at one of the great backwaters of the Middle Eastern economy: Islamic endowments, which control tens of billions of dollars of assets around the region.
The endowments, known as awqaf, receive donations from Muslims to operate specific social projects, such as mosques, schools and welfare schemes. The system goes back more than a thousand years, to soon after the birth of Islam.