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COVER STORY 27th July 2016 (Volume 13 Issue 30)

Irans inward investment environment:

Will a watched pot never boil?
A year has passed since the Iran nuclear is rife and dissatisfaction appears to clear guidance from the US as to what
deal and the lifting of international be spreading within the country in they can and cant do, agreed Kiyan
sanctions but where is the flood of April, US Secretary of State John Kerry Zandiyeh, the portfolio manager for
inward investment that the economy met with Iranian Foreign Minister Sturgeon Capitals Iran Fund. The
expected to see? Rumors have emerged Javad Zarif to discuss concerns over the Iranians see this as a stumbling block
of dissatisfaction within Iran at the implementation of the JCPOA, after Iran to getting benefit from the lifting of
slow progress of economic change, voiced frustration at the slow pace of the sanctions and they are exerting a lot
while foreign investors remain wary financial sanctions relief promised by of pressure to change the situation.
of the market and uncertainty over US the deal. Irans central bank governor, However, he warns that: There still is
secondary sanctions continues to inhibit Valiollah Seif, has already warned a level of mistrust between the Iranians
activity. LAUREN MCAUGHTRY takes that the agreement could be at risk if and their counterparts to the JCPOA, and
a closer look at what is really happening the US doesnt act to facilitate Irans vice-versa, with certain factions on both
in the worlds largest Islamic economy. reintegration into the global markets. sides having an interest in the deal not
being fully implemented.
Iranian concerns Slow progress
The Joint Comprehensive Plan of Action However, observers note that a This divergence between expectation
(JCPOA), an international agreement transformation of this magnitude will and reality has been reflected in the
on the nuclear program of Iran, always take time. Upon the lifting recent volatility of the market. Between
was agreed in Vienna on the of sanctions, the sentiment January (when sanctions were lifted) and
14th July 2015 and EU and in Iran arguably was one April, the market rallied just above 30%,
primary US sanctions of over-excitement, with noted Kiyan. However since then till
were lifted the following expectations of immediate the end of June, it fell 10%. So from initial
January. After an initial benefits, explained Clemente high hopes, we saw a dramatic lowering
surge of excitement Capello, the founder and of expectations.
however, the optimism chief investment ocer of
began to slow. US banks UK-based asset management Positive steps
and citizens are still firm Sturgeon Capital. The Recent months have brought good news,
restricted from engaging reality is, these benefits take however and the market is looking
with Iran, and the country a while to play out, and optimistic. Foreign direct investment
remains unable to process as such expectations are into Iran rose to US$4.5 billion in the
international financial adjusting. first quarter of this year the highest
transactions or repatriate growth in over a decade, according to fDi
assets from overseas What the European Intelligence.
accounts. Uncertainty banks are looking for is
continued on page 3

Opening doors to
PARTNER WITH US new opportunities
Contact for more information: Franois-Xavier Chenhalls-Walker Email: francois.xavier@REDmoneygroup.com
 IFN RAPIDS
Volume 13 Issue 30
DEALS
IFN Rapids ................................................... ..2
Besraya (M)s Sukuk
IFN Reports: Mudarabah due and
Cybersecurity locks down Islamic banking
payable on 28th July
Mobarakeh Steel Company
digital innovation UAE eases rules for SME
raises IRR1 trillion (US$33.2
sector a fine opportunity for Islamic finance? million) from Sukuk sale
Sukuk sector sees surge as second half looks Togo launches XOF150
billion (US$250.99 million)
promising Indonesia aims to enhance role
10-year Sukuk
of Shariah investment managers through new
rules Company Focus: Amana Takaful Life
AEON Credit issues
expanding Takaful business in Sri Lanka with
RM20 million (US$4.92
million) one-month Sukuk
Murabahah
IPO oering The IDB to assist OIC countries
Jambatan Kedua issues
to capture e-commerce opportunities through
RM2.6 billion (US$636.7
new global initiative Pakistans senate widens million) Sukuk Murabahah
in multiple tenors
regulations and facilitates growth of Shariah
Indonesian government
compliant financial products with amended bill
targets IDR4 trillion
Arab Monetary Fund aligning with global Islamic (US$305.6 million) via
finance bodies to facilitate integration of Shariah sovereign Sukuk auction
finance in Arab world Sovereign Sukuk: Togo Malaysias GII Murabahah
issuance oversubscribed
makes headway .......................................... 6
2.45 times
IFN Analyses: NEWS
Palestine: Path to recovery .................................. 14 Uganda to introduce
Islamic microfinancing by
Islamic syndicated financing slowing down in
2017
the first half of 2016 ................................... 15
Standard Bank to join
Case Study: Bangladeshs Islamic
MB Holdings maiden Sukuk ..................... 16 banking community; central
bank approves license
Columns:
Thinking big .............................................. 17
Bank Islam Malaysia inks
agreement to finance two
The blunt end ............................................. 18 Waqf land projects
Country Correspondent: Bank Negara Malaysia to
Kazakhstan................................................. 19
release fintech regulatory
framework in fourth
quarter of 2016
Sector Feature: Alliance Financial Group
considering merging with
Understanding syndicated finance ............. 20
parent company of Alliance
Islamic Finance news ................................... 21
Islamic Bank
Deal Tracker ................................................. 28
Bank Muamalat Malaysia
REDmoney Shariah Indexes ...................... 29 launches socially responsible
debit card; to contribute 20%
Eurekahedge Funds Tables........................ 31
of debit card interchange fee
Dealogic League Tables .............................. 33 to Waqf collection
REDmoney Events ...................................... 37 Al Rayan Banks expat
property financing surges
Subscription Contact................................... 37
Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best
endeavors and eorts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are
accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney.
2 27th July 2016
141% since 2013 with
15% of new financing
originating in January-May
2016 period
Regulator cancels the
banking license of Bank
Asya
Clyde & Co looks to
Southeast Asia for Islamic
expansion
ASSET
MANAGEMENT
Bursa Malaysia to enhance
framework for collective
investment scheme; seeks
public feedback on key Murabahah
proposals
AMMB Holdings acquires
100% shareholding
in AmIslamic Funds
Management and
AmFunds Management
Bank Asyas ratings
Securities Commission
Malaysia amends unit trust
regulatory framework; new
initiatives to take eect on
15th August
Securities and Exchange
Commission of
Pakistan introduces new
calculation and disclosure
requirements for asset
management companies
TAKAFUL
Great Eastern Takaful to
launch new products
Capital Financial
Indonesia to set up Takaful
unit and venture capital
fund with fresh capital from
its IPO
Qatar Central Bank issues
circular allowing Takaful
and insurance operators to
impose higher premium on
risky drivers members to Green Sukuk
Al Alamiya for
Cooperative Insurance
Company receives approval
from Shariyah Review
Bureau
Amana Takaful Life floats
IPO to overwhelming
demand
RATINGS
Capital Intelligence arms
Kuwait Finance Houses
financial strength rating at
BBB
Islamic International
Rating Agency assigns
BBB rating to AlBaraka
Insurance Company with a
stable outlook
RAM rearms AA2/
Positive rating on Encorp
Systembilts Sukuk
West Coast Expressway
maintains AAA Sukuk
ratings
Islamic International
Rating Agency withdraws
Moodys arms A3 long-
term ratings of Export-
Import Bank of Malaysia
(EXIM) Sukuk Malaysia
Rating agencies evaluate
Turkey post-coup;
downside risks for banks
increase
Omani banks credit growth
materially outpaces deposit
growth a credit negative,
says Moodys
Axiata Groups US$500
million Sukuk facility
receives definitive Baa2
rating
MOVES
MCB Bank appoints new
director
Clean Energy Business
Council appoints new chair
and vice-chair; adds new
Working Group
Four executive vice-
presidents of Turkiye
Finans resign

Irans inward investment environment: Will a watched pot never boil?
Continued from page 1
Although the volumes do not yet meet
the stated government ambitions of
US$30-50 billion in foreign capital per
year, progress has been positive. KPMG
recently released a report that found 12
sectors for inward investment worth an
estimated US$250 billion, while inward
FDI projects jumped from just three in
2013 to nine in 2015.
The
expectation
that it would take
off overnight after
sanctions were
lifted was always
unrealistic these
things
take time
Siemens in March signed a preliminary
rail deal for US$2.3 billion while Airbus
and Boeing have reportedly received
orders for US$27 billion and US$17.6
billion respectively; and talks this month
with Japans Mitsui Chemicals and
French oil giant Total are expected to
bring in a further US$60 billion in foreign
investment.
On the banking side, a report from the
Financial Times claims that the financial
services sector has also seen inward
investment of over US$60 billion. There
are current liquidity issues but once
these are resolved, banks will be the big
winners. The Iranian economy is bank-
based and when trade finance and LCs
return, you will find the better banks
will have a very high return on equity
and will benefit from that growth story,
pointed out Payam Malayeri, the head
of asset management at Grion Capital,
a Cayman Islands-registered asset
management and private equity group
and one of the few investment firms fully
focused on the Iranian market.
A challenging market
All this sounds promising so whats
the bad news? Most significantly,
practitioners warn that Irans financial,
COVER STORY
legal and regulatory framework is simply
not yet advanced enough to accommodate
the influx. The barriers to entry are
notable foreigners need handholding
and guidance, explained Payam. The
integration of Iran back into the global
economy will take time. Currently, there
is a rather [large] gap between Western
regulatory standards and regulations
in Iran. SWIFT is on, but correspondent
banking relationships are a stumbling
block today. There are a lot of challenges
and most foreigners who want to work
with or invest in Iran will need the help
and guidance of local experts.
A question of perception
While there are very real obstacles to
development, much of the white noise
in the market appears to be a question
of perception. There are two types
of challenges real and perceived,
commented Capello. From an
infrastructure standpoint the market is
well developed. We have more than a
decade of experience in frontier markets
and Iran is the most developmentally
sound, liquid, diverse market that we
have dealt with, so concerns around that
are misguided. The main concern for us
is that western and international banks
are still not keen to transact Iranian
business because they are afraid of
sanctions. Their compliance departments
have not been updated and their internal
regulations prevent them from having
anything to do with Iran. That has been
the biggest challenge for everybody. The
most frustrating point is that it is not a
rational conversation, but a dogmatic
one.
Moving forward
So how do you overcome these issues?
Reputation is important, as is working
with a local partner. One of the
first things that Sturgeon
Capital did in the asset
management space was
to set up an institutional
grade, very transparent
and scalable platform for
governance and industry
best standards. We spend
a lot of time on sanctions
compliance and what that
means in terms of how you
invest, noted Payam.
Its a very hard market
for those that dont have
3 27th July 2016
the relationships to penetrate, agreed
Abradat Kamalpour, a finance partner
and head of the newly-created Iran
desk at Ashurst. However, those that
have the relationships and the language
and the cultural understanding are
doing very well. We are already deeply
involved in a number of transactions.
As impetus builds, there is increasing
pressure on the US to clarify the situation
and remove uncertainty. Right now
the restrictions are just a self-inflicted
disadvantage by the US, said Capello.
Its not getting anywhere in terms of its
stated political objectives, which are to
create better understanding between the
west and Iran. The sanctions are really
just making life dicult for banks.
However, progress is gradually taking
place. There is a lot of momentum
building up, noted Abradat. The
expectation that it would take o
overnight after sanctions were lifted was
always unrealistic these things take
time. Any investor that wants to get in
needs to go and understand the market
first, meet people, understand the legal
framework. No one is going to put half
a billion dollars in tomorrow. But the
due diligence trips and the compliance
investigations are happening now.
A land of opportunity
For those early movers brave enough to
dip a toe in the waters, the rewards look
to be worth the risk. Valuations are cheap,
with average PE ratios standing around
7, according to Grion Capital. Average
dividends for the broader market are
around 11-12% around 30-50% cheaper
than emerging markets and frontier
markets, pointed out Payam. We think
this discount will close in the years ahead
so first movers will have an advantage.
The returns are already validating
entry. Between its launch on
the 4th April 2016 to the 28th
June, Grion Capitals initial
euro-denominated share series
gained 3.6% despite a market
correction of 8.2% in the TEDPIX
(the main index of the Tehran
Stock Exchange) and has thus far
materially outperformed the
industry benchmark. We
expect our AUM [assets under
management] to be between
continued on page 4

Irans inward investment environment: Will a watched pot never boil?
Continued from page 3
EUR50-60 million (US$54.86-
65.83 million) by December
2016 year-end, noted Payam.
Sturgeon has seen a similar
trajectory. Performance
has been positive from
February to June, we are up
13% in euro terms while the
market is up about 8%,
Capello told IFN.
The improving
macroeconomic
environment should only help matters
last month the countrys inflation
rate dropped to single digits (9.7%) for
the first time in 25 years, which means
riskier assets like equity will benefit.
The Tehran Stock Exchange in July
announced its approval by the World
Federation of Exchanges, which should
bring another boost. But its not just the
equity markets that are tempting foreign
investors. At the moment, you can also
invest in government treasury bills,
which are giving yields north of 20%
very attractive in a world where most
sovereign bonds are bringing in zero,
said Payam. Its a great choice for
yield-hungry investors and it also brings
diversification to a portfolio.
The key benefit of Iran is its already
developed and diversified economy
only around 10-20% of its GDP
comes from hydrocarbons, compared
with around 45% for Saudi Arabia, for
example. Iran is not just an oil and
gas story. There are deals being done
on solar, rail, auto manufacturing,
technology, mining and minerals,
pharmaceutical, technology and
aviation, noted Abradat. Its just a
matter of time before the big guys can
start playing ball with confidence.
Investor interest
So who has been brave enough to take
the first plunge? Unsurprisingly, the
first movers have been high-net-worth
investors and family oces. They are
the more intrepid and nimble investors
with less red tape and are faster to
get comfortable, commented Payam.
However, the investor profile is already
changing. We do have institutional
investors in our fund already and by
the end of the year they will be the
majority, he noted. They have taken
more time to come online because their
COVER STORY
due diligence takes longer,
but they are getting there
slowly.
And while the standard
intelligence says that
US citizens are banned
from engaging in Iran,
IFN has learned that the
opportunities may
nevertheless be too
tempting for some
investors to pass up.
We have seen dramatic interest from
high-net-worth investors and family
oces including Americans,
revealed Capello. Americans are not
allowed to decide whether to invest in
Iran, but there are ways around that
there are exceptions for certain types
of investors. Without going into detail,
we have found a lot of interest from
investors that were a combination of
two groups: [those with] 1) a certain
amount of sophistication and 2) limited
bureaucracy in their organization.
Government
treasury bills
are giving yields
north of 20%
very attractive in a
world where most
sovereign bonds are
bringing in
zero
Islamic opportunity
The elephant in the room is of course
the impact that all this interest
and activity could have on
the Islamic finance industry.
There have been concerns
that while Iran is ostensibly
the worlds biggest Islamic
economy, its systems are
so dierent that this may
not have a notable impact
on industry development.
However, Abradat
believes that it is
instead an issue of
4 27th July 2016
changing perceptions. Everything in
Irans financial market must be Shariah
compliant. Shariah compliance is done
based on the models developed in Iran
and signed o by the relevant Shariah
scholars in Iran. Other players in the
market will need to adapt to understand
their way of transacting, he explained.
You have the GCC model and the
Malaysian model. Now there is another
model in the market, and Iran has the
largest amount of Islamic banking assets
in the world so it will behoove the
industry to take notice. If people want to
access the Iranian market, they will need
to understand how it works.
Investors are already aware of the
specific requirements of the Iranian
economy, and while not all funds
investing into Iran define themselves
as Shariah compliant to their investors,
they believe that they oer a genuinely
Islamic opportunity. All investments in
Iran are Shariah compliant. All the fixed
income is Islamic, so they all tick the
Islamic boxes. It is an Islamic country
so there are no non-Islamic sectors,
Payam explained to IFN. The majority
of investors have been conventional
investors looking for returns. However,
we have also talked to investors who
focus on the Islamic side, and want
exposure to Iran because it complies
with their requirements. Even those
asset managers who have not yet
explored Shariah compliant options
are, through the opportunities in Iran,
learning more about the potential within
the Islamic market. Our mandate is
more generic, commented Capello.
We are at a stage where we would be
interested to learn more about Islamic
investors but we are still in the early
stages.
Looking ahead
So where next? Instead of being a
watched pot that never boils, Iran
appears to be transforming before
our very eyes into a vibrant and
attractive investment destination
and key players are starting
to sit up and take notice. The
bigger financial institutions are
about six months to a year away
from entering the market and
a lot of them are just getting
continued on page 5
 COVER STORY

Irans inward investment

environment: Will a
watched pot never boil?
Continued from page 4

ready now, said Abradat. There is

a lot of interest in the Iranian market
from Asia especially Southeast
Asia as well as Japanese and Korean
institutions and these players are
going in aggressively and signing deals.
There are also a lot of European banks
already doing business there, and since
launching our Iran desk weve had a few
global banks approach us to make plans.
A few GCC entities are very interested
but they are in the early stages.

Its just a
matter of time
before the big guys
can start playing #IFNPakistan16
ball with
conidence IFN Pakistan Forum
26th September 2016
Learning Resource Centre,
And of course, all this interest will only The State Bank of Pakistan, Karachi
have a positive impact on the Shariah
compliant financial framework. These The Islamic banking industry in Pakistan has progressed considerably since its introduction to the South Asian
banks will have to develop Islamic nation, with its share reaching almost 12% of the overall banking industry in terms of its asset size. The branch
finance capabilities to get involved in network of Islamic banking is continuously expanding throughout the country at a rapid pace, and the strong
Iran, and that will act as a catalyst for demand for Shariah compliant banking products is reflective of the State Bank of Pakistan(SBP)s goal of having a
the global industry, Abradat confirmed. 20% market share by 2020.
The institutions that are getting in
now and building the relationships and The SBP and the Securities and Exchange Commission of Pakistan have played key roles in driving the growth of
taking measured and calculated steps to Islamic finance in the country by creating a facilitative environment. As a result, both the regulators initiatives over
move in will be in a very good position. the years have led to the stability and resilience of the Islamic finance industry, making it a worthy consideration to
The global Islamic finance industry the conventional finance and banking activities among investors and banking consumers.
could do with a bit more energy. Ever
since the financial crisis, innovation has With its population slowly but surely becoming aware of the competitive depth of Islamic finance, Pakistan remains
slowed and it needs a bit of impetus. a vital market in the eyes of investors in the growing industry.
Once Iran opens up, it will act as a
catalyst for the market, and it will be a
vital cog in the global wheel. REGISTER FREE NOW
www.REDmoneyevents.com
At the end of the day, however, the
appeal will be in the performance and
institutions will follow where investors EXCLUSIVE LEAD PARTNER ACCREDITATION PARTNER
forge a trail. In a world where returns
are going down and investors are
hungry for yield, Iran looks very
attractive, concluded Payam. It is a
LEAD MEDIA PARTNER MEDIA PARTNER
classic case of risk versus rewards but
the rewards are underestimated and the
risk is overstated. With time, that will
reverse. W: www.redmoneyevents.com | E: emerson.dinesh@redmoneygroup.com | T: 603 2162 7800 ext. 43 | Twitter : #IFNPakistan16

5 27th July 2016

 IFN REPORTS

Cybersecurity locks down Islamic banking digital innovation

It is the digital era and banks,
including if not especially Islamic
banks, stand to lose out should they
not adapt and implement eective
digitization strategies. In previous IFN
coverage on the digital race, we have
focused primarily on the economics of
digitalization as the main impediment
for many Islamic banks; VINEETA
TAN this week however highlights
another aspect that could be a hurdle
for financial institutions to adapt in a
period of disruption.

Not moving fast enough

Over the next three years, it is likely
that four out of 10 retail banks would be
displaced by digital disruption this is
what is projected by technology services
provider Cisco which also posited
that retail banks are not optimizing
their earning potential through digital
services. It is estimated that consumer
banks have the potential to realize
US$405.3 billion over the 2015-17 period,
yet in 2015, less than one-third (29%)
managed to capture that opportunity;
and as a result of not digitizing more
fully, a total of US$144 billion globally in
opportunities have escaped retail banks.
With the pressing realities of agile
fintech disruptors, digital consumer
demands and complex regulatory
hurdles, the question of how retail banks
can compete and capture the revenue
opportunity at hand has come to the
fore, commented Mike Weston, the
vice-president of Cisco Middle East.
Too many banks are moving slowly
or not at all. By waiting to digitize their
business, or by delaying new technology
initiatives, banks risk not only missing
out on the potential value at stake, but
are actually at risk for being put out of
business altogether.
Cyber threat
Islamic banks are especially more
vulnerable due to economies of
scale: generally speaking, Shariah
banks are smaller and therefore have
greater constraints when it comes to
allocating resources to develop their
digital oerings. Building mobile
applications, streamlining payment
systems, enhancing online gateways, and
providing virtual tellers and video-based
advisors are cost-intensive exercises, and
except for a few well-capitalized Islamic
banks (especially those with access to
the deep pockets of their conventional
parent), it is generally a struggle for
Shariah banks to develop such digital
capabilities.
60% are
reluctant to
jump on the digital
bandwagon due to
the perceived
risks
Cost aside however, there is another
lingering issue that these banks face: the
threat of cyber attacks. Cyber attacks
are grave issues in the financial world
and if hackers are able to infiltrate and
steal from central banks and mega
banks (US$81 million was stolen from
Bangladeshs apex bank in February
while confidential information on
JPMorgan Chases customers were
compromised as a result of a hack in
2014), it is no surprise that the financial
community is extremely wary about
the digital game. After all, virtualized
delivery models, asset transfers,
wealth management and omnichannel
capabilities are all exposed to such
attacks which could very well trigger a
collapse of the banking system. The US
Treasury is understood to have recently
concluded a cybersecurity exercise to
better safeguard the financial fraternity.
These fears have translated into the rate
of digital adoption by banks (or lack
thereof): an overwhelming majority
of the 1,014 senior finance and line-of-
business executives worldwide surveyed
by Cisco attributed cybersecurity risks
and threats as a major hindrance to
digital innovation in their organizations.
The findings are alarming: 60%
are reluctant to jump on the digital
bandwagon due to the perceived risks
while 39% admitted that mission-critical
initiatives have been halted due to such
concerns.
The Middle East, home to a large
concentration of Islamic financial
institutions, is more susceptible to
such attacks. In 2015, Middle Eastern
companies suered more losses than
any other regions as a result of cyber
incidents; a 2016 PwC report found 56%
losing more than US$500,000 compared
with 33% globally, and 13% losing at
least three working days, compared
with 9% globally. These cyber criminal
activities have created a booming market
for cyber security or cyber defence in the
Middle East, which is expected to grow
at a cumulative annual growth rate of
22.5% from 2016-22.
Already multiple cybersecurity start-ups
have emerged from this time of
uncertainty, and Islamic banks will also
need to make their move to assess and
adopt the right measure to avoid making
cybersecurity concerns a hindrance to
digital innovation, on which their
survival in the competitive landscape
hinges.

6 27th July 2016

 IFN REPORTS

UAE eases rules for SME sector a ine opportunity for Islamic
inance?
The Ministry of Human Resources
recently issued a decree that exempts
SMEs from bank guarantees beginning
October this year, in what is considered
a move to boost the growth of the
industry in the Emirates. How will
the new decree, DANIAL IDRAKI
asks, present a prime opportunity for
Islamic finance to fill the funding gap
of the SME sector, which has been
underserved by banks in the past?
Minister of Human Resources and
Emiratization Saqr Ghobash said recently
that the bank guarantees had been in
place to safeguard laborers rights, but
after studying the level of commitment
displayed by SMEs, the ministry decided
to put in place the decree to exempt
the businesses from bank guarantees.
The decision is considered a major
step toward reaching a competitive
knowledge-based economy that revolves
around young Emirati talents. The decree
came in line with the ongoing future
government strategy which appreciates
the empowerment of citizens in the labor
market to enhance its productivity, Saqr
noted in a statement.
SMEs, [and] one of the key reasons has
been the inability of banks to understand
who their customers are, and what they
want to do, KPMG commented.
If the SME sector in the UAE has not
had much progress in securing funding
from banks over the years, how then
might the new relaxed ruling by the
government provide an opportunity
for Islamic finance to flourish in the
sector? Given the necessity of the
direct link between Islamic finance
and real economic activities as well as
financial inclusion, funding SMEs meets
Shariah requirements as it satisfies the
material and social needs of a particular
community. With the SME sector now
doing away with bank guarantees,
a requirement that has stifled the
sectors growth over the years, Islamic
financial institutions are presented
with an incentive to develop specific
products tailored to the needs of the SME
community for the growth of the sector.
According to a joint report by the World
Bank and the IDB, Islamic finance can
play a significant role in closing the
financing gap for SMEs by developing
an enabling environment for asset-based
and equity-based finance, which would
allow markets to attract excess liquidity
in Islamic financial markets, especially
in the Middle East, that are seeking
attractive investment opportunities.
Irrespective of how Islamic finance
is labeled, based on the core values
of promoting economic development
through a portfolio of asset-based and
equity-based financing solutions, a clear
financing gap for SMEs can be tackled
and served through Islamic banking and
non-banking financial services, the joint
report noted.
The recent decree indicates the strategic
importance of the SME sector to the
country and after having had a tough
time over the past year with tightening
liquidity among banks and plunging
commodity prices that have shaken
much of the GCC region, it is certainly a
respite for the sector, and an opportunity
for Islamic financial institutions to make
further inroads.

A clear
inancing gap
for SMEs can be
tackled through
Islamic
banking
According to a report by KPMG, SMEs
make up 90% of employment in the
UAE and 40% of bank lending, as well as
contributing 40% to the countrys GDP.
It forms the backbone of the countrys
economic development, with over 282,000
companies currently operating in the
Emirati. The report noted that the SME
sector has been relatively underserved
by banks and other financial institutions
for some time, as it has always been
seen as more likely to fail than larger
organizations. Banks are more reluctant,
even in good times, to lend to SMEs.
Perhaps the biggest issue has been the
ability of financial organizations to
accurately assess the risk of financing

7 27th July 2016


Sukuk sector sees surge as second half looks promising
Since its stellar performance of 2012,
Sukuk volumes have struggled against
regional and economic headwinds
hampering their trajectory. The oil
price plummet of 2014-15 strained the
GCC and Southeast Asian markets
while ongoing financial pressures
have distracted attention away from
the burgeoning development of
this fledgling sector. However, as
commodities recover and oil bounces
back, 2016 looks considerably more
promising. LAUREN MCAUGHTRY
takes a birds-eye view.
The markets are approaching a more
stable setting, as activity picks up
after Ramadan and the post-summer
buzz looks positive. The Bloomberg
Commodity Index is up 7.62% year-to-
date (as of the 25th July) up from a
record low of 72.88 on the 20th January
this year while oil prices have also
firmed up this year and in June the US
Energy Information Administration
upped its crude forecasts to US$43 per
barrel in 2016 and US$52 per barrel in
2017.
Investor
appetite has
improved this year:
beneiting from the
hunt for yield in the
light of low rates
in mature markets,
while emerging
markets appeal has
been renewed by the
recent resurgence of
commodity
prices
On the back of this stability, the
Sukuk sector is seeing a minor surge.
According to the latest results from
Fitch Ratings, Sukuk issuance from
key markets rose 11% in the first half
IFN REPORTS
of 2016, underlining expectations of a
gradual recovery in the market after a
disappointing performance the previous
year. Total new Sukuk issuance (with
maturity of more than 18 months) in
the key markets of the GCC, Malaysia,
Indonesia, Turkey and Pakistan rose
to US$21.74 billion compared with
US$19.54 billion in the first half of
2015. With an even spread over the
two quarters (US$11.07 billion in the
first quarter and US$10.67 billion in the
second quarter), growth also looks to
be consistent rather than boosted by big
outlying deals.
In fact, in the first half of the year Sukuk
represented 30% of total issuance in
these key markets, up from 28% in 2015.
The proportion would have been even
higher, noted Bashar Al Natoor, the
global head of Islamic finance at Fitch
Ratings, but for the return of Abu
Dhabi and Qatar to the sovereign bond
market.
Sovereigns in the Gulf have primarily
tapped the conventional market this
year as a quick way to raise easy funds
from international investors, with US$5
billion and US$9 billion from Abu Dhabi
and Qatar respectively. However, with
several more Gulf states including
Kuwait and Saudi Arabia considering a
8 27th July 2016
foray into the capital markets this year,
the Sukuk sector could benefit from
further sovereign interest. The decision
whether to issue bonds or Sukuk, or
a mix, depends on factors including
the target investor and funding base
(international or regional and local),
the existence of a Sukuk structure and
Islamic finance strategy, and the needs
and size of the Islamic finance industry,
said Bashar.
On a positive note, investor appetite
has improved this year: benefiting
from the hunt for yield in the light of
low rates in mature markets, while
emerging markets appeal has been
renewed by the recent resurgence of
commodity prices. With downwards
pressure on interest rates from the
recent UK decision to leave the EU
and the upcoming elections in the US,
jittery investors have calmed down and
issuance volume should benefit from a
more stable environment.
We expect issuance to be relatively
quiet in the third quarter due to the
combination of the summer and Eid
breaks, with a pick-up toward year-
end, said Bashar. Overall, our
expectation is for 2016 Sukuk issuance
to at least match 2015 issuance of
around US$32 billion.
 IFN REPORTS

Indonesia aims to enhance role of Shariah investment

managers through new rules
VINEETA TAN reports on the latest Chart 1: Indonesian Shariah mutual fund industry performance
regulatory eort by the Indonesian
Financial Services Authority to boost its IDR billion Total
Shariah capital markets.
12.000 120

The Indonesian financial services regulator 10.000 100

has released a draft regulation on Islamic
investment managers as part of the 8.000 80
Republics five-year strategy to position
itself as a center for Shariah finance, a title 6.000 60
held by its neighbor Malaysia.
4.000 40

Since the ive-

2.000 20

0 0
year roadmap Jan Feb Mar Apr May

was introduced last 2010 2011 2012 2013 2014 2015 2016

year, the Shariah Number of Shariah mutual funds NAV of Shariah mutual funds

compliant mutual Source: OJK

fund industry this year as outlined by the OJKs Islamic

has seen a steady
increase in the
number of
Islamic funds
The Financial Services Authority or
Otoritas Jasa Keuangan (OJK) over the
past year has taken steps to bolster its
Islamic financial legal infrastructure
including issuing new regulations on
various Islamic products such as real
estate investment trusts and easing
Shariah mutual investment rules as
well as allowing for Shariah hedging
instruments. The latest draft regulation,
which is open to public feedback until the
1st August, has been designed with the
objective of enhancing the role of market
participants in the Islamic space. The new
rules are expected to come into eect
Capital Market Roadmap (2015-19).
The regulation details the licensing
process and requirements of Islamic
investment managers among other
things. Under the proposed rules,
Shariah investment managers will be
categorized under two classifications
based on paid-up capital: those with
a paid-up capital of at least IDR25
billion (US$1.91 million) will be parked
under Classification II, allowing them a
broader scope of product management
as compared to Classification I Islamic
investment managers who have a paid-
up capital of IDR10 billion (US$764,000).
Since the five-year roadmap was
introduced last year, the Shariah
compliant mutual fund industry has
seen a steady increase in the number of
Islamic funds, rising from 74 in 2014 to
102 as of May 2016 (grabbing an 8.46%
total market share), according to latest
OJK statistics. However, in terms of
total net asset value (NAV), Shariah
funds have been experiencing a decline:
it reached IDR9.56 trillion (US$730.38
million) in May, dropping from IDR11.02
trillion (US$841.93 million) as at the
end of 2015 which was a slight fall from
2014s IDR11.16 trillion (US$852.62
million) a reverse trend is observed
for the conventional mutual fund
segment. In terms of percentage to the
entire mutual fund industry, the NAV of
Shariah funds have tumbled every year
from the 2013 high of 4.9% to 3.16% as of
May 2016.
Measures have been taken to boost the
Islamic mutual fund industry including
new rules allowing investment managers
to have funds invested wholly in foreign
Shariah compliant securities which
encouraged a number of players
including Manulife Asset Management
and BNP Paribas to launch global
Shariah funds.

Straight to Web Feature

Indonesia Shariah hedging rules for Islamic banking
On the 17th June, Bank Indonesia (BI), the Indonesian central bank, conducted a seminar on the circular BI External Circular Letter
18/11/DEKS on Hedging Transactions Based on Islamic Principles (the Circular). The Circular was issued to explain how the regulation
BI Regulation 18/2/PBI/2016 on Hedging Transactions Based on Shariah Principles (the Regulation) (which commenced on the 26th
February 2016) would be implemented. The Regulation was prepared in line with the National Shariah Board of the Indonesian Ulema
Council (DSN-MUI)s Fatwa 96/DSN-MUI/III/2015 on Shariah hedging transactions.

To read the full article, log on to www.islamicfinancenews.com.

9 27th July 2016


Company Focus: Amana Takaful Life expanding Takaful
business in Sri Lanka with IPO offering
In a showcase of the growing
importance of Takaful in the Sri Lankan
market, Amana Takaful Life (ATLL),
a wholly-owned subsidiary of Amana
Takaful, recently announced that its
IPO of 50 million shares at LKR1.5
(1.03 US cents) each on the Diri Savi
Board of the Colombo Stock Exchange
amounting to LKR75 million
(US$512,996) were oversubscribed,
as it seeks to expand its footprint in the
under-served market. DANIAL IDRAKI
takes a look at what is in store for the
growth of the life Takaful provider in
the South Asian nation.
According to the Insurance Board of
Sri Lanka (IBSL)s Statistical Review
2015, the number of eective policies
in force as a percentage of the total
population was 13.4% in year 2015, while
Chart 1: Financial highlights of Amana Takaful
10,610
9,510
8,260
1,830
1,789
1,296
968
569
543
318 365
2011 2012 2013
General Takaful General Takaful ...... Family Takaful
contributions net claims incurred
Source: Amana Takaful Life Annual Report 2015
Straight to Web Feature
Are the emerging markets from Africa, Saudi Arabia and the Red Sea tailwinds for Islamic finance?
Africa, being the home to 26 of the 56 IDB member countries, and the Kingdom of Saudi Arabia (KSA), the home of IDB, are
undergoing significant structural changes to position them for growth. JIM ALTENBACH explores two out of the 170 panel discussions
held during the 19th Annual Milken Institute Global Conference in the US, about how the KSA, the Red Sea market and Africa are
emerging and how these trends provide tailwinds for Islamic finance.
IFN REPORTS
insurance premium as a percentage of
GDP was 1.09%, reflecting a growing
need for higher levels of penetration
to provide coverage in a population of
approximately 20 million. The IBSLs
report stated that insurance penetration
is still at a lower level compared with
many other economies in the Asian
region, and this indicates that there is a
significant opportunity for insurers to
expand their businesses.
ATLL commented that its IPO,
which represents a 10% stake in the
company, provides a growth impetus
for the life Takaful provider, which has
outperformed the industry for three
consecutive years in terms of growth.
We see tremendous opportunity in
the growth story of Sri Lanka, ATLLs
CEO, Reyaz Jerey, noted during the
15,065
12,087
2,309
1,973
1,130
750 928
735
679
2014 2015
...... Family Takaful
  surely moving in a direction that utilizes
To read the full article, log on to www.islamicfinancenews.com.
10
announcement of its IPO plans. The
market is relatively untapped and we
see increased demand for life insurance,
stemming from key economic activity
and infrastructure development. As we
approach US$4,000 per capita income,
there will be key segments that will
actively seek life insurance as opposed to
the current push strategy, he explained.
According to ATLL, it has grown at a
compound annual growth rate (CAGR)
of 31% over the last five years and
recorded a gross written premium (GWP)
of LKR928 million (US$6.35 million)
for the financial year ended the 31st
December 2015, a 36.71% growth over
the previous year. ATLL was separated
from its parent company in 2015 as part
of an industry-wide regulatory directive
to segregate life and general insurance
companies in the country. In its first year
of operations as an independent entity,
the company recorded a profit after tax of
LKR18 million (US$123,119), according to
its annual report.
ATLL noted that it plans to grow at a
CAGR of 34% over the next five years,
supported by several initiatives that
include entering into bancassurance
arrangements with Amana Bank, in
which discussions are currently ongoing.
With the Sri Lankan insurance industry
as a whole posting a commendable
growth rate of 16.12% in total GWP in
2015 amounting to LKR122.39 billion
(US$837.14 million) ATLL is on a
journey to realizing a great potential for
growth in a market that is slowly but
Islamic finance principles.
27th July 2016
 IFN REPORTS

The IDB to assist OIC countries to capture e-commerce

opportunities through new global initiative
VINEETA TAN explores how IDBs
participation in the new global eTrade
For All is significant to Muslim
communities.
Muslim countries, which generally
have relatively smaller participation
in the e-commerce market, will have
greater access to the US$22 trillion
segment under a new global initiative
involving an alliance of international
entities, supranational organizations and
businesses including the IDB.
IDBs Islamic Trade Finance Corporation
(ITFC) has joined eTrade For All a
newly-launched initiative seeking to
facilitate developing countries access
technical assistance and financial
resources needed to leverage online
commerce to create new economic
opportunities. Other organizations
engaged with the initiative include
the World Bank, the United Nations
Germany and the UK, according to
statistics from UNCTAD which also
reported that over 70% of the population
in Denmark, Luxembourg and the
UK are shopping online; whereas less
than 2% of the populations of Muslim-
majority countries such as Bangladesh
and Indonesia engage in online retail
transactions.
The
participation
of ITFC in eTrade
For All could
narrow the gap and
potentially create
opportunities for
A huge divide is opening between
countries that are exploring those
opportunities and those that are not,
UNCTAD Secretary-General Mukhisa
Kituyi confirmed.
Yet, despite countries with Muslim-
majority populations such as Indonesia
and Malaysia having comparatively low
online spending power and activity,
data from AT Kearney shows that the
e-commerce penetration growth rate in
the MENA region, where Islam is the
dominant religion, and Asia Pacific,
home to half of the worlds Muslims
(according to Pew Research), are highest
at 45% and 35% respectively as compared
with 15% in the US, 20% in Europe and
30% in Latin America this represents
an opportunity for not only e-commerce
but Halal e-commerce as well.
The participation of ITFC in eTrade For

Conference on Trade and Development
(UNCTAD), World Trade Organization
and African Development Bank.
The e-commerce market has grown
exponentially over the last few years,
rising by 38% to US$22.1 trillion in 2015
from 2013. However, the geographic
growth is largely concentrated in non-
Islamic nations the top 10 e-commerce
markets include China, the US, Japan,
cross-border Halal
All could narrow the gap and potentially
create opportunities for cross-border
trade, which would Halal trade, which would subsequently
open the door for Islamic finance. The
subsequently open idea is to leverage this global platform to
support member countries in seven
the door policy areas: e-commerce assessments,
information and communication
for Islamic technology infrastructure, payment,
trade logistics, legal and regulatory
inance frameworks, skills development and
financing for e-commerce.

Table 1: Top 10 B2C e-commerce markets in 2015, ranked by number of online buyers
B2C sales B2B sales Online buyers
Country US$ billions US$ billions Number in millions Annual spend per Source
buyer (US$)
1 China 623 2,078 413 1,508 Ministry of Commerce
2 US 511 6,072 166 3,072 Bureau of Census and eMarketer
3 Japan 114 2,380 57 1,994 Ministry of Economy, Trade and
Industry
4 Germany 52 966 41 1,270 Federal Ministry for Economic
Aairs and Energy
5 UK 174 709 38 4,539 Interactive Media in Retail Group
6 Brazil 12 112 33 376 E-bit
7 Russian Federation 23 700 30 756 E-commerce Europe
8 France 72 600 25 2,916 Federation du e-commerce et de la
vente a distance (Fevad)
9 Republic of Korea 48 969 22 2,120 Statistics Korea (Kostat)
10 India 20 298 22 891 Internet and Mobile Association of
India
Top 10 total 1,648 14,884 848 1,944
Global estimates 2,204 19,904 - - eMarketer (B2C) and UNCTAD (B2B)
Source: UNCTAD

11 27th July 2016


Pakistans senate widens regulations and facilitates growth of
Shariah compliant inancial products with amended bill
The Senate of Pakistan has approved the
Securities and Exchange Commission
of Pakistan (SECP) (Amendment)
Bill 2016 which will facilitate better
superintendence and control over the
countrys capital and financial services
market, corporate sector and insurance
industry. The bill, which was already
approved by the National Assembly
with further amendments earlier in May,
also aims to widen the scope of powers
and functions of the SECP regarding the
regulations and facilitation of growth for
Shariah compliant financial products,
and to ensure the healthy growth of the
corporate sector and to promote good
governance. DANIAL IDRAKI reports.
In a bid to raise the standards of the
countrys capital markets to be on par
with its international peers, the SECP
stated in a statement that the new law
seeks to provide protection to investors
by ensuring the development of a sound
regulatory framework to counter illegal
and unfair practices in the financial
services market, as well as to control and
minimize market abuse, misconduct and
financial crimes in sectors that it regulates.
The law will meet the local and
international requirements for the
corporate sector regulator, including
Arab Monetary Fund aligning with global Islamic inance
bodies to facilitate integration of Shariah inance in Arab world
Islamic finance is top on the agenda of
the Arab Monetary Fund (AMF) as an
instrument to develop the economies
of Arab nations and the institution
has aligned with the IFSB to meet this
objective. VINEETA TAN reports.
Providing assistance to the development
of the Islamic finance industry and
supporting capacity development in
the region have always been among our
top priorities, and we look forward to
pursuing and intensifying this eort
to better tackle the needs of [the] Arab
region to building up innovative, robust
and competitive financial systems at both
domestic and regional levels, said Dr
Abdulraman A Al Hamidy, the director
general chairman of the AMF board.
The AMF and IFSB have for years
IFN REPORTS
the requirements of the International
Organization of Securities Commissions
(IOSCO). According to the SECP, major
deficiencies of the current law SECP
Act 1997 include limited financial
and administrative independence of
the regulator, lack of provision on
the acting chairman, as well as the
ineective enforcement powers to
request for information. Furthermore,
the current law lacks proper process for
the prosecution of cases and inadequate
investigating powers, among others.
Additionally, in order to introduce
transparency, provisions regarding
disclosure of information in [the] public
interest along with statutory powers to
assess potential and emerging systemic
risks in the capital market are also
introduced in the bill, the SECP noted.
The bill will also provide the framework
for the establishment of an independent
audit oversight board to ensure the
quality of audit of public-interest
companies and an eective mechanism
and self-regulatory organizations to
ensure compliance with the regulatory
regime of the regulated sectors.
With the new law, the SECP will be
able to seek international cooperation
and extend assistance to a foreign
collaborated in the area of Islamic
finance; however, both the institutions
decided to take their cooperation to the
next level by formalizing it through a
three-year MoU under which they will
jointly establish and promote Islamic
finance development initiatives in the
Arab region. This includes conducting
joint awareness programs, hosting joint
training programs and expanding Islamic
finance e-learning courses and the
database as well as expanding the body
of Islamic finance research.
Recognizing Islamic finance as a potential
tool to support its development goals, the
AMF has been forming strategic alliances
with global Islamic finance bodies to
accelerate the integration of Shariah
finance to boost financial inclusion. In
October 2015, the AMF entered into an
12
regulatory authority in matters relating
to investigation and inquiries, given
that the current law does not provide
statutory provision to that extent. The
SECPs mandate has continued to
be enhanced over the years through
various amendments involving the
flotation, management and regulation of
Modaraba (1999); insurance sector (2000);
non-banking financial companies (2002);
commodity futures market (2003) and
real estate investment trusts (2008).
The regulator is stepping up eorts
to make the countrys capital markets
as attractive as possible, as it prepares
for the eventual inclusion in the MSCI
Emerging Markets Index in May 2017,
which is expected to see an influx of
foreign funds that will be banking on its
growth potential for maximum returns.
Pakistan surprised many when it was
included in the upgrade from its current
Frontier Markets status, while economic
powerhouse China was left out from the
inclusion. The Pakistan Stock Exchanges
main index, the KSE 100, soared to an
all-time high and became one of Asias
best performing indices this year after the
MSCIs announcement in June.
MoU with International Islamic Liquidity
Management Corporation to provide
technical support services to develop the
industry.
Apart from building Islamic finance
capacity in the Arab world, the IFSB is
also leveraging this new partnership with
the AMF to create a stronger presence in
the region. This MoU provides an
excellent platform for the IFSB to engage
and build relationships with its members
in the Arabic-speaking jurisdictions,
confirmed IFSB Secretary-General Jaseem
Ahmed. It is an opportunity to benefit
from both institutions expertise,
especially for enhancing the outreach to
member countries for awareness-
building, exchange of information and
knowledge-sharing.
27th July 2016
 IFN REPORTS

Sovereign Sukuk: Togo makes headway IFN Sector Correspondents

In what would be its sovereign debut
issuance, Togo announced that it is
launching a 10-year Sukuk oering
with the Islamic Corporation for the
Development of the Private Sector
(ICD) as the lead arranger for the deal.
intermediation of Togo (Togo SGI).
Proceeds from the facility will be used to
finance the countrys economic and social
development projects.
Malaysia
ACCOUNTING:
Mezbah Uddin Ahmed, member of the Association of
Chartered Certified Accountants and associate researcher
at International Shariah Research Academy for Islamic
Finance (ISRA).
CROSS-BORDER FINANCING
Fara Mohammad, director of Islamic finance, Foot Anstey
CAPITAL MARKETS:
Suhail Ahmad, CEO, Hikmah Capital Corp

Over in Southeast Asia, meanwhile, Malaysias government investment issue DERIVATIVES:

key sovereign issuers Malaysia and
Indonesia kept the market busy with
their regular issuances. DANIAL
IDRAKI brings you the usual updates.
Togo
Togo has launched a XOF150 billion
(US$250.99 million) 10-year Sukuk
oering with a 6.5% profit margin,
according to its prospectus, and the
subscription period for this facility will
run until the 10th August 2016, with a
possibility of early closing. The ICD is
the lead arranger while lead managers
comprise SGI African Stock Exchange
(Attijariwafa Bank), BOA Capital
Securities (BMCE Bank of Africa), Coris
Bourse (Coris Bank International),
Ecobank Development Corporation
(ETI) and Management Company and
Upcoming sovereign Sukuk
Country Amount
Togo XOF150 billion
Oman US$2 billion
Senegal XOF150 billion
(GII) Murabahah issuance of RM3.5
billion (US$856.96 million) with a profit
rate of 3.74% was oversubscribed by
2.45 times after receiving total bids
of 211 with a total amount of RM8.59
billion (US$2.1 billion), according to
an announcement on Bank Negara
Malaysias website.
Indonesia
The government of Indonesia is targeting
to raise IDR4 trillion (US$304.8 million)
through the sale of its sovereign Sukuk
(SPN-S 27012017 and four project-based
securities series) on the 26th July 2016 in a
bid to finance the Republics 2016 State
Budget, according to an announcement
on the Ministry of Finances website.
Expected date
TBA
TBA
July 2016
Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah
Compliant Investment Association and advisor to 5Pillars
GLOBAL ECONOMIC OUTLOOK:
Tariq Alrifai, expert, Islamic investment products and
market trends
LAW (EUROPE):
Ayhan Baltaci, attorney at law, Bereket & Baltaci Law Firm
LAW (MIDDLE EAST):
Bishr Shiblaq, head of Dubai oce, Arendt &
Medernach
LEASING:
Youssef Aboul-Naja, Ijarah specialist, a supranational
banking institution
MERGERS & ACQUISITIONS:
Tushar Garg, associate, bulge bracket investment
bank
MICROFINANCE (ASIA):
Dr Mahmood Ahmed, executive vice-president and
director training, Islami Bank Training and Research
Academy
MICROFINANCE (AFRICA):
Mansour Ndiaye, director of microfinance, Assistance and
Consulting for Development
PRIVATE BANKING & WEALTH MANAGEMENT:
Thomas Woods, product development, wealth
management, The Islamic Bank of Asia
PRIVATE EQUITY & VENTURE CAPITAL:
Arshad Ahmed, partner, Elixir Capital
PROJECT & INFRASTRUCTURE FINANCE
Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
REAL ESTATE
Philip Churchill, founder partner, 90 North Real Estate
Partners
REGULATORY ISSUES (ASIA)
Intan Syah Ichsan , chief operating ocer, Samuel Aset
Manajemen
REGULATORY ISSUES (MIDDLE EAST):
Mohammad Abdullah Malik Dewaya, head of Shariah
compliance and audit, Maisarah Islamic Banking Services

Iran IRR60 trillion 2016 RETAIL BANKING:

Chowdhury Shahed Akbar, ocer, Southeast Bank,
Bangladesh.
Nigeria TBA TBA
RISK MANAGEMENT:
Jordan JOD175 million TBA Dr Ken Baldwin, lecturer in finance, Coventry University
SECURITIES & SECURITIZATION:
Pakistan PKR79.1 billion TBA Nidhi Bothra, executive vice-president, Vinod Kothari
Consultants
Egypt TBA 2016 STOCK BROKING & TRADING:
Athif Shukri, research analyst, Adl Capital
Kazakhstan TBA 2016
STRUCTURED FINANCE:
Kenya TBA 2016 John Dewar, partner and head of Islamic finance, Milbank,
Tweed, Hadley & McCloy
South Africa TBA 2016 SUKUK
Anthony Coleby, head of corporate commercial
Bangladesh TBA TBA department, Said Al Shahry Law Oce (SASLO)
SYNDICATED FINANCE
Hong Kong US$500 million to US$1 billion TBA Damir Galiev, portfolio manager, AK BARS Bank

Ningxia Hui Autonomous Region US$1.5 billion TBA TAKAFUL & RE-TAKAFUL:
Dr Sutan Emir Hidayat, assistant professor and academic
advisor for Islamic finance, University College of Bahrain
Niger XOF150 billion TBA
TAKAFUL & RE-TAKAFUL (AFRICA):
Luxembourg TBA TBA Uwaiz Jassat, acting head of Islamic banking, Absa Islamic
Banking
Tunisia US$500 million TBA TAKAFUL & RE-TAKAFUL (EUROPE):
Ezzedine Ghlamallah, director, Solutions Insurance and
UAE TBA TBA Islamic Finance in France (SAAFI)
TRADE FINANCE
Shandong Province CNY30 billion TBA Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
Sindh Province US$200 million TBA
TREASURY PRODUCTS:
Kuwait KWD5 billion Sept 2016 Nafith Al Hersh Nazzal, Islamic banking specialist,
certified financial and investment advisor
Maldives TBA TBA IFN Correspondents are experts in their respective fields
and are selected by Islamic Finance news to contribute
Sri Lanka US$1 billion TBA designated short sector reports. For more information
about becoming an IFN Correspondent, please contact
sasikala.thiagaraja@redmoneygroup.com

13 27th July 2016


Palestine: Path to recovery
After years of economic struggle, Palestine is finally showing signs of recovery. VINEETA TAN provides an
overview of Palestines Islamic banking and finance industry.
Economic and political
background
The Palestinian economy has long
struggled and the Gaza conflict
has strained it further; however, its
economy is on the path to recovery
due to reconstruction eorts which has
bolstered Gazas economy. According
to the World Bank, the Palestinian
economy grew by 3.3% in 2015 and real
GDP growth in Gaza hit 5%, driven by
strong growth in the construction sector
as well as retail and wholesale trade.
The situation in West Bank is, however,
dierent as growth slowed in 2015 with
real GDP dropping 2.5 percentage points
to 2.8% in 2015.
The West Bank is divided into three
areas: A (self-rule), B (ruled by Palestine
and Israel) and C (governed by Israel).
Natural resources of the West Bank are
primarily found in Area C and the World
Bank has stated that at least US$3.4
billion could be added to the Palestinian
economy if businesses were able to access
Area C, though currently the manner in
which Area C is administered essentially
precludes Palestinian businesses from
investing there.
Regulatory landscape
Palestine is governed under the Basic
Law, enforced in 2002 and based
loosely on the Islamic Shariah; however,
the countrys banking system is a
combination of both conventional and
Islamic modes. There is not a separate
legislation for Shariah compliant
financial transactions as all financial
activities, which are regulated by the
Palestine Monetary Authority (PMA),
fall under the same statutes, namely the
Law of Jordan of 1966 and the Palestine
Monetary Authority Law of 1997.
Banking and inance
There are currently three licensed Islamic
banks in Palestine: Arab Islamic Bank
(AIB), Palestine Islamic Bank (ISBK) and
Al Safa Bank which joined in 2016.
Palestinian Finance House Corporation
was the first Islamic financial institution
to be established in Palestine (1994),
IFN COUNTRY ANALYSIS
ANALYSIS
PALESTINE
followed by Cairo Amman Bank Islamic
(2005), AIB, ISBK and Al Aqsa Islamic
Bank (2010); however, Cairo Amman
Bank Islamic and Al Aqsa were absorbed
by ISBK. Islamic National Bank in Gaza is
another Shariah bank; however, it is not
licensed by the PMA.
Together, AIB and ISBK command about
10% of the total banking share, according
to shareholder Palestine Investment
Fund (PIF) which owns stakes of 21%
and 34% in the respective banks.
In March 2016, the Bank of Palestine
received shareholders approval to
acquire an additional 31% stake in AIB,
which will allow them to become a
majority shareholder with a 51.98% stake.
PIB in April 2016 also raised its capital
insurance in Palestine (2007) and
through a secondary public oering
forms one-half of the Takaful operator
which was oversubscribed. PIB made a
community with the other being Gazas
pre-tax profit of over US$10 million in
Al Multazem Insurance Company
the third quarter of 2015, 22.77% higher
formed in 2012. Using Al Takafuls 2015
than the year before while total assets for
financial as a benchmark (Al Mutazems
the reported period surpassed US$635
records are not publicly available), the
million, referring to the increase in net
Takaful market in Palestine is growing
equity of up to US$70.8 million.
steadily as the firm realized a production
growth rate of 26% on the back of a 2%
In addition to the three Islamic banks,
expansion by the whole insurance sector.
Shariah financing is also oered by
Al Takaful, which increased its market
other smaller specialized institutions
including microfinanciers. There is an
share to 14% from 11.7% in 2014, also
raised its capital to US$10 million and
Islamic leasing company in Palestine
distributed 10% free bonus shares to
(established in 2013), set up by PIF and
shareholders after realizing a profit in
ISBK in partnership with the Islamic
2015 and is actively seeking to expand its
Corporation for the Development of the
branch network, which as at April 2016
Private Sector.
stood at 21 branches.
Microinance Conclusion
Shariah compliant microfinance
Despite economic and political volatility
products are available in Palestine
as well as regulatory obstacles, the
through approximately nine institutions
Islamic finance and banking market of
including Faten, Asala, ACAD, IBDAA
Palestine is growing steadily as
and REEF. A majority of these fundings
demonstrated by the growth in the
are provided by non-governmental
number of participants, market share and
organizations such as the Palestinian profitability of these institutions. This
Businesswomens Association, the Arab reflects both the promising demand
Center for Agricultural Development, levels for Shariah compliant financial
Palestine for Credit and Development services as well as strong commitment by
and the IDB-funded Deprived Families market players; however, for the industry
Economic Empowerment Program. to progress further, there is a need to
enhance the legal infrastructure, expand
Takaful the Islamic finance human capital pool
and increase public awareness.
Al Takaful Insurance Company is the
first to provide Shariah compliant
14 27th July 2016

Islamic syndicated inancing slowing down in
the irst half of 2016
Islamic syndicated financing witnessed a slight drop in the first half this year as compared with the same period
in 2015, although the market welcomed several debutants. DANIAL IDRAKI recaps recent transactions in this
specific area of the Islamic finance industry.
Overview
Data by Dealogic shows that total Islamic
syndicated financing for the first half of
2016 stood at US$6.79 billion, with deals
done across the Middle East, the Indian
subcontinent, Africa, Southeast Asia
and Europe. Saudi Arabia, the UAE and
Bahrain were the top three countries in
total volume with a combined value of
US$5.37 billion. The figure, however,
is less than half of the US$15.11 billion
in deal value that was achieved in the
same period of 2015, suggesting that the
market is slowing down in tandem with
the overall weakening of global economic
growth, as banks tighten their belts with
less risk appetite for financing.
For the entire year of 2015, total global
Islamic syndicated financing more
than doubled to US$23.41 billion from
US$11.57 billion in 2014.The UAE, Saudi
Arabia and Malaysia led the pack in
total deal volume, with US$8.12 billion,
US$5.77 billion and US$3.09 billion deals
recorded respectively.
Chinas growing appetite for
Islamic inancing
The worlds second-largest economy is
increasingly turning to Islamic financing
for major infrastructure projects. China
and Pakistan recently got their hands
in the game in one of the largest project
financing deals along the China-Pakistan
Economic Corridor under Chinese
President Xi Jinpings ambitious One
Belt, One Road initiative. Worth
approximately US$1.95 billion, the dual-
currency multijurisdictional part-Islamic
financing package will be used to fund
the development of the Thar Block II
coal mine and two associated 330MW
coal-fired power plants in Thar, Pakistan.
Some of the largest Chinese banks and
Pakistani banks were involved in the
rupee-dollar cross-border deal including
the Industrial and Commercial Bank of
China, China Construction Bank, state-
owned China Development Bank as well
as Habib Bank and Meezan Bank (the
largest Islamic bank in Pakistan) as part
of a 13-bank consortium.
IFN SECTOR ANALYSIS
ANALYSIS
SYNDICATED FINANCING
Debut in the syndicated
Islamic inancing market
Turkeys state-owned Ziraat Participation
Bank made its debut in the syndicated
Islamic financing market when it secured
a US$155 million syndicated Murabahah
dual-currency financing facility in April
this year. The Shariah compliant bank
had increased the facility size from an
initial US$75 million after receiving a
strong response from the market. The US
dollar and euro-denominated facility is
structured with a three-month LIBOR/
EURIBOR plus 1.1% pricing. Bank ABC
Islamic, Dubai Islamic Bank, HSBC and
Warba Bank were the initial mandated
lead arrangers and bookrunners for the
one-year facility. Bank ABC, meanwhile,
acted as the coordinator for the facility.
The proceeds from the facility will be
used to support the funding requirement
of SMEs and the financing of trade-
related businesses of its commercial
clients.
The investment arm of the Kingdoms
National Oil and Gas Authority,
Nogaholding, secured a US$570 million
Murabahah syndicated financing in
April this year from as many as 10 local,
regional and international banks. The
Shariah compliant five-year deal with
the financiers is Nogaholdings first
syndicated financing since the holding
company was formed in 2007. The facility
was increased by 60% from its original
size, and the 10 banks that participated in
the Murabahah deal were: Arab Banking
Corporation, Ahli United Bank, Arab
Petroleum Investments Corporation,
Gulf International Bank, National Bank
of Bahrain, Qatar Islamic Bank, Kuwait
Finance House, The Bank of Tokyo-
Mitsubishi UFJ, BNP Paribas and HSBC.
Bank Islam Malaysia concluded a
RM121.44 million (US$29.87 million)
Tawarruq financing for Kerian Energy in
August in 2015. The transaction marked
its first involvement as a lead arranger
for a syndicated project financing facility
for a hydropower plant project. Proceeds
from the financing were to be utilized to
15
part-finance up to 75% of the total cost of
the development and construction of a
14MW mini hydropower plant in Sungai
Kerian, Perak, Malaysia.
Project and infrastructure
inancing
In Malaysia, property developer UDA
Holdings signed a financing agreement
to procure a syndicated Islamic financing
facility of up to RM500 million (US$123
million) to part-finance eight projects
with an estimated gross development
value of RM1.62 billion (US$398.52
million). An Hwang Investment Bank,
AmInvestment Bank and RHB Islamic
Bank were the joint mandated lead
arrangers while Bank Pembangunan
Malaysia and Kuwait Finance House
(Malaysia) were the co-arrangers for the
syndicated facility.
Eastern & Oriental, through its
subsidiary Tanjung Pinang Development,
secured up to RM1.08 billion (US$265.68
million) in syndicated banking facilities
from Maybank Islamic Bank and RHB
Islamic Bank in December in 2015.
Maybank Investment Bank and RHB
Bank were the joint principal advisors,
mandated lead arrangers, underwriters
and bookrunners for the facility
which will be used to part-finance the
reclamation and infrastructure works of
the Seri Tanjung Pinang Phase 2 project
in the state of Penang.
Multi-tranche facilities
Gulf Marine Services secured a US$620
million syndicated debt facility
combining Islamic and conventional
financing in November 2015.
Emirates Global Aluminium launched
the syndication for its US$4.9 billion
seven-year corporate facilities comprising
a commodity Murabahah facility and a
conventional facility in November 2015
to refinance existing project finance debt
facilities. The facilities are structured
with a three-year grace period and a 30%
balloon payment on maturity.
27th July 2016
 CASE STUDY

MB Holdings maiden Sukuk US$150 million

Multicurrency Sukuk program
Mohammed Al Barwani Holding Denton & Co, one of the legal advisors
(MB Holding) recently revitalized the of the Sukuk, told IFN that the US$76 million
Omani corporate Sukuk space, after introduction of the new Sukuk law
three years of hiatus, with a US$76 took place during the course of this
million Sukuk Wakalah facility, pioneering Sukuk transaction which
becoming the second corporate to issue required the documents to be reviewed
Sukuk and interestingly, the first to and amended where necessary to ensure 29th June 2016
tap the domestic Islamic debt market compliance with the new regulation.
pursuant to the newly-issued Sukuk
regulation. NURUL ABD HALIM Issuer Mohammed Al Barwani
explores the workings of this exciting There was Sukuk Issue
deal. Obligor MB Holding
a further Size of issue US$76 million

complication in
The facility was engineered using the Mode of issue Private placement
Wakalah structure given the nature of Purpose To settle certain

that the MSM does

assets tied to MB Holding (the obligor) outstanding financing
that were available for the transaction. arrangements, support

not currently have

certain MBH subsidiaries
According to the prospectus, assets
with regards to their
under the Wakalah portfolio include capital expenditure
real estate units used by MB Holding,
externally-leased real estate assets and
the capability to commitments and cash
requirements and for other
certain Shariah compliant shares which
meet specified eligibility criteria.
enable US dollar- Tenor
corporate purposes
Five years
denominated Issuance price 100% of the aggregate face
amount of the certificates
Proceeds raised from the Sukuk will
be used by the issuer to settle certain certiicates to be Profit rate
Payment
8.5%
Semi-annually
publicly
outstanding financing arrangements,
support MB Holdings subsidiaries Currency US dollars and Omani rial

traded
capital expenditure commitments and Maturity date 29th June 2021
cash requirements, and also for the Lead National Bank of Oman
multinational conglomerates other managers and (NBO) and Standard
bookrunners Chartered Bank
corporate purposes. Prompt analysis of the new regulation Principal NBO and Standard
was undertaken, followed by a meeting advisor(s) Chartered Bank
Issued by way of a private placement, with the Capital Market Authority to Governing Omani law
the US dollar Shariah compliant discuss the impact on the transaction, law
certificates are part of the companys said the law firm adding that the Legal Dentons & Co, Oman
US$150 million multicurrency Sukuk exchanges inability to accept US dollar advisor(s)/ branch and Dentons &
program and had been listed, together certificates on the market also presented counsel Co (to the issuer and
with the Omani rial tranche, on the another hiccup. There was a further MBH), Trowers & Hamlins
Muscat Securities Market (MSM)s complication in that the MSM does not (to the issue manager,
joint placement agents,
Bonds and Sukuk Market eective upon currently have the capability to enable
collecting bank and sole
the publication of its prospectus on the US dollar-denominated certificates to structuring advisor as to
29th June 2016. This is the first Islamic be publicly traded. The certificates will the laws of Oman) and
debt issuance, and the maiden Islamic be traded over-the-counter until MSM Allen & Overy (to the joint
financing, by MB Holding, and also the is able to accept US dollar-denominated placement agents and sole
instruments to be publicly traded. structuring advisor)
second corporate Sukuk issuance in the
Listing MSM
Sultanate.
Established in 1982, MB Holding is a Shariah Shariah Supervisory
multinational corporation and one of the advisor(s) Committee of Standard
Marking a significant milestone in Chartered Bank and
Omans Islamic capital market, the five- fastest growing and largest oilfield
Amanie Shariah
year unrated dual-tranche certificates services companies in the Middle East Supervisory Board
come on the heel of the newly-published with operations in over 15 countries.
Structure Sukuk Wakalah
The main activities of subsidiary
Sukuk regulation, which seeks to spur Tradability The certificates will be
companies within MB Holding include traded over-the-counter
further Sukuk issuances particularly
drilling and oilfield services, exploration until MSM is able to accept
from private sector players. While
and production of oil and gas, marine US dollar-denominated
the new Sukuk law may be a boon for
and engineering services, mining and instruments to be publicly
prospective issuers, it presented certain traded
investments.
challenges in MB Holdings case. Face value OMR100,000 (US$258,947)

16 27th July 2016

 COLUMN

Thinking big
By Kavilash Chawla, a partner at boutique
management consulting firm Bton Global
and a visiting scholar at Drake University.
This month has been another one
for the ages, with global turmoil
everywhere we look. The most recent,
and perhaps the most directly relevant
to financial services at large and Islamic
finance in particular is the coup attempt
in Turkey. Lets think big about the
good, the bad, and the ugly of it all.
The good
While an attempted military coup is
hardly a good thing, the aftermath of the
failed attempt does have some positive
elements. The key good is that it shows
the commitment of both the Turkish
people and other Turkish public sector
institutions to democracy. This is no
small thing, and is very positive, not
only for Turkey at large, but for Islamic
finance as well. As a Muslim-majority
democratic state built around secular
public institutions, Islamic finance
(referred to as participation finance
in Turkey), has always
had to walk a bit of
a tightrope in
Turkey.
About 15
or even 10
years ago,
navigating
and growing
the industry
in Turkey
was delicate.
Today, even
the Turkish
of comfort for both the population and
institutions in navigating the reality
that Turkey is both a Muslim country
and a democratic one. Despite political
dierences that exist, the response clearly
indicates a preference for accepting this
multifaceted identity of being a Muslim
country with a democratic system of
government. Thats good for Islamic
finance.
finance is a tool toward empowerment,
The bad
The bad is about what happens now. An
increasingly autocratic response to the
coup would be bad. Certain sectors of the
Turkish economy, such as transportation
and tourism, are already forecast to
have double-digit retractions this year.
An increasingly insular response would
cause further and broader economic
contraction, undoing the good that has
built a reservoir of trust and faith in
institutions and good governance in
Turkey.
The education sector in Turkey,
especially private institutions of higher
learning have been a very attractive
investment target, including for
Shariah compliant investors.
Sweeping decisions to punish
an entire sector is bad for the
economy as a whole and for
investors.
Moreover, the growth of
Islamic finance depends on
a vibrant economy where
businesses and individuals
feel comfortable spending,
have excess income to save
and invest, and see value in
building a vibrant democracy within a
Muslim-majority country with strong
institutions and even a stronger belief in
secularism is a monumental challenge.
But it is a challenge that President Recep
Tayyip Erdogan must succeed at! The
inability to navigate this challenge
represents a very ugly scenario. The
values-based foundations of the Islamic
finance industry reinforce the ethic that
justice and service. Economic and
financial returns are necessary conditions
for success, but they are not sucient
conditions. Islamic finance is a system of
capital allocation that balances financial
and economic returns within a very
deliberate values-based framework.
The values-
based
foundations of the
Islamic inance
industry reinforce
the ethic that inance
is a tool toward
empowerment,
justice and service.
Economic and
inancial returns are
necessary conditions

for success, but

government is building their society rather
robustly involved than disengaging.

they are not

in the industry.
The good from the failed
coup attempt for Islamic
finance is twofold. Firstly,
the public response
across Turkey reinforces
a commitment to law,
regulations and strong
institutions, all of which are
critical to a vibrant financial
services industry. Secondly,
the public and institutional
response, including from the
business community,
indicates a growing level
A heavy-handed response will give
significant pause to investors and
businesses, as it creates uncertainty
and works toward undermining
market-based forces in dictating
economic activity and capital
allocation and reinforcing a political
calculus in driving economic and
capital allocation decisions.
The ugly
The ugly is that the divisions in
Turkish society that the failed coup
helped bring to the forefront are
increasingly real. Navigating and
suficient
conditions
Increasing civil unrest, internal instability
and fractionalization within Turkey
represent a significant threat to the ability
to eectively employ that values-based
framework while meeting the necessary
conditions of financial and economic
returns. In short, the good, the bad and
the ugly of it will come down to how
President Erdogan responds.

17 27th July 2016

 COLUMN

The blunt end

By Mohammed Khnifer, an Islamic debt
capital markets banker at a supranational
banking institution as well as an AAOIFI-
certified Shariah advisor and auditor.
Europes top business schools are
sending a message: MBA holders may
no longer be able to push the envelope
of fi nancial innovation. The rapidly
changing spectrum of investment and
their recruiting process to the fact that
The root of fi nancial education will ultimately raise
standards as the pool of talent deepens.
the problem
seems to stem
It is usually the case that these HR sta
do not have an academic qualification
primarily from in banking or fi nance which makes
the process of grasping what Islamic
the employment fi nance is all about more dicult.

wholesale banking requires its match

of Master of Science (MSc) specialized selection criteria of While the need for highly trained
human capital in the Islamic fi nancial
fi nance degrees.
HR who apparently services industry is well acknowledged,
the root of the problem seems to
The good old days when a human
resources (HR) manager is forced
are not instructed stem primarily from the employment
selection criteria of HR who apparently
to choose a graduate specialized in
economics to be placed in the corporate
to handpick are not instructed to handpick Islamic
fi nance graduates who hold specialized
fi nance division (which is not the
graduates exact discipline) should have
Islamic inance MScs.

gone by now. But apparently, they are graduates who hold With that being said, there are signs
not (at least in some jurisdictions). that HR in Wall Street are changing
specialized their methods, albeit slowly. Of US-
What the old generation of HR based professionals in possession of an
managers, who might not have a MScs MSc degree in fi nance on
proper banking academic background, eFinancialCareer.coms resume
should come to realize is that should change fundamentally the database, just 4.8% are working in
the fi nancial industry is in the way the recruiting process mergers and acquisitions, while 7%
process of being reshaped is being implemented work in a markets-related role. Let us
from top to bottom by these universal see how many years we will take to
by graduates who banks. An MSc change the recruitment methodology of
hold the so-called degree provides a HR.
specialized fi nance professional boost
degrees (SFDs). when it is arguably
As MBA holders most needed, @MKhnifer
were the hot helping students
trend for to get ahead right
the past at the start of their Are you receiving our daily
decade, MSc careers. In contrast, IFN Alerts?
holders with MBAs often stipulate
a specialized several years of work
fi nance experience as a pre-entry
background requirement.
should be
the winning These are the next No.
bet in the age generation of graduates
of fi nancial whom you should pay a
innovation as premium in order to recruit
their technical them. Unfortunately, many
expertise is poised of them are eliminated by
to take us to the a computer-based software
next level. Specialized while they are in the first stage
MSc degrees in of the recruitment process.
capital markets, They do not even reach the
corporate fi nance, scrutiny process by the HR
fi nancial engineering, sta. With the evolution of
Islamic investment progressive specialized MSc The Number ONE news service with
banking, fi nancial risk degrees, the stakeholders over 20,000 registered daily readers
management and even of the investment
international shipping banks should adapt

18 27th July 2016


Zaman Bank on course to be fully-ledged
Islamic bank
KAZAKHSTAN
By Timur Rustemov
In accordance with its annual general
meeting, Zaman Bank shareholders
have consented to the voluntary
reorganization of the bank into an
Islamic bank. Within a few months of
the preparation of a high-level business
plan for launching the new Islamic
bank, Zaman Bank submitted an
application to the regulatory authorities.
On the 13th July 2016, National Bank of
Kazakhstan approved Zaman Banks
plan on the conversion process to be
completed not later than October 2017.
Having a
strategic
cooperation
with the Islamic
Corporation for
the Development of
the Private Sector,
Zaman Bank is
expected to capture
the retail Islamic
banking market
with a potential
total share of
40% in
Kazakhstan
Currently, the top management of the
bank is accelerating eorts to upgrade
the banks IT system, establish a Shariah
Supervisory Board and train the
banks personnel. Aiming to become
a fully-fledged retail Islamic bank in
the country, the Zaman Bank team is
working on the development of a wide
range of Islamic financial products
focusing on SMEs and individual
sectors.
IFN
IFNCOUNTRY
SECTOR
CORRESPONDENT
The management had analyzed in
detail the success story of retail Islamic
banks in 12 countries and prepared
a new strategy suitable for the local
legal and tax industries and business
environment.
According to the National Bank of
Kazakhstan, on the 1st July the bank's
assets totaled KZT15.7 billion (US$45.73
million) which is 0.06% of the assets of
the entire banking sector, while the loan
portfolio was KZT12.7 billion (US$36.99
million). The deposit portfolio of the
bank reached KZT2.8 billion (US$8.15
million) where 85% are corporate
deposits while equity capital is about
KZT12.1 billion (US$35.24 million).
Despite that, Zaman Bank is the 33rd
bank out of a total of 35 regional banks
in Kazakhstan that has its headquarters
outside Astana and Almaty.
In addition, Zaman Bank does not have
any non-performing loans and external
debts to creditors. Being part of the
Zaman Group of companies, Zaman
Bank and Zaman Leasing are taking
steps in developing the Islamic finance
industry in Kazakhstan. Prior to this,
Zaman Leasing became a co-founder of
Kazakhstan Ijara Company the first
company that provides Islamic leasing
services to SMEs and corporate clients.
Zaman Bank is an active supporter of all
Islamic finance initiatives in the country.
Since the beginning of the year, hundreds
of SME entities and corporations had
expressed their willingness to switch
from conventional to Islamic and become
a client of the Islamic bank.
Having a strategic cooperation with
the Islamic Corporation for the
Development of the Private Sector,
Zaman Bank is expected to capture
the retail Islamic banking market
with a potential total share of 40% in
Kazakhstan.
Timur Rustemov is the deputy chairman of
the Association for Development of Islamic
Finance. He can be contacted at t.rustemov@
zamanbank.kz.
19
IFN Country Correspondents
AFGHANISTAN: Dr Alam Khan Hamdard
president, Afghanistan Islamic Finance and Consulting Co
AUSTRALIA: Dr George Mickhail
senior lecturer, School of Accounting, Economics and Finance,
University of Wollongong, Australia
BAHRAIN: Dr Hatim El-Tahir
director of Islamic Finance Knowledge Center, Deloitte &
Touche
BANGLADESH: Md Shamsuzzaman
deputy managing director, Islami Bank Bangladesh
BELGIUM: Prof Laurent Marliere, CEO, ISFIN
BERMUDA: Belaid A Jheengoor
director of asset management, PwC
BRAZIL: Fbio Figueira
partner, Veirano Advogados
BRUNEI: Dr Aimi Zulhazmi, Islamic finance consultant,
Draznine Advisory
CANADA: Jerey S Graham
partner, Borden Ladner Gervais
CHINA: Abdullah Han
partner, Al-Sadiq Consulting
EGYPT: Dr Walid Hegazy
managing partner, Hegazy & Associates
FRANCE: Kader Merbouh
co-head of the executive master of the Islamic finance, Paris-
Dauphine University
HONG KONG: Amirali Bakirali Nasir
chairman, The Law Society of Hong Kong working party on
Islamic finance
INDIA: H Jayesh
founder partner, Juris Corp
INDONESIA: Farouk A Alwyni
CEO of Alwyni International Capital and the chairman
of Centre for Islamic Studies in Finance Economics and
Development
IRAN: Majid Pireh
Islamic finance expert, Securities & Exchange Organization
of Iran
IRAQ: Khaled Saqqaf
partner and head of Jordan & Iraq oces, Al Tamimi & Co
ITALY: Stefano Padovani, partner and head of Banking &
Finance, NCTM Studio Legale Associato
JAPAN: Kaoru Haraguchi
founding attorney, Haraguchi International Law Oce
JORDAN: Nafith Al Hersh Nazzal, Islamic banking specialist,
certified financial and investment advisor
KAZAKHSTAN: Timur Rustemov, deputy chairman,
association for development of Islamic finance
KENYA: Mona K Doshi
senior partner, Anjarwalla & Khanna Advocates
KOREA: Yong-Jae Chang, partner, Lee & Ko
KUWAIT: Alex Saleh, partner, Al Tamimi & Co
LEBANON: Johnny El Hachem
partner corporate, Bin Shabib & Associates
LUXEMBOURG: Said Qaceme, senior manager of Advisory &
Consulting, Deloitte Tax & Consulting
MALAYSIA: Ruslena Ramli
head, Islamic finance, RAM Rating Services
MALDIVES: Aishath Muneeza
deputy minister, Ministry of Islamic Aairs, Maldives
MALTA: Reuben Buttigieg
president, Malta Institute of Management
MAURITIUS: Mohammad Akshar Maherally
Director (taxation), International Financial Services
MOROCCO: Ahmed Tahiri Jouti
managing consultant, Al Maali Consulting Group
NEW ZEALAND: Mohamed Nalar
trustee and board member, Awqaf New Zealand
NIGERIA: Auwalu Ado;
Shariah auditor, Jaiz Bank
OMAN: Muhammad Abdullah Dewaya
Islamic finance scholar
PAKISTAN: Muhammad Shoaib Ibrahim
managing director & CEO, First Habib Modaraba
PHILIPPINES: Rafael A Morales
managing partner, SyCip Salazar Hernandez & Gatmaitan
QATAR:Amjad Hussain
partner, K&L Gates
RUSSIA: Roustam Vakhitov
managing partner, International Tax Associates
SAUDI ARABIA: Nabil Issa
partner, King & Spalding
SENEGAL: Abdoulaye Mbow
Islamic finance advisor, Africa Islamic Finance Corporation
SOUTH AFRICA: Amman Muhammad
CEO, First National Bank-Islamic Finance
SINGAPORE: Suhaimi Zainul-Abidin,
advisor, 5Pillars
SRI LANKA: Imruz Kamil
head of Islamic banking, Richard Pieris Arpico Finance
SWITZERLAND: Khadra Abdullahi
associate, Investment banking, Faisal Private Bank
SYRIA: Gabriel Oussi,
general manager, Oussi Law Firm
TANZANIA: Yassir Masoud
head, Islamic banking, retail banking, National Bank of Commerce
TURKEY: Ali Ceylan
partner, Baspinar & Partners
UAE: Rima Mrad
partner, Bin Shabib & Associates
UK: Fara Mohammad
director of Islamic finance, Foot Anstey
US: Joshua Brockwell
investment communications director, Azzad Asset Management
YEMEN: Moneer Saif; head of Islamic banking, CAC Bank
IFN Correspondents are experts in their respective fields and
are selected by Islamic Finance news to contribute designated
short country reports. For more information about becoming
an IFN Correspondent please contact sasikala.thiagaraja@
redmoneygroup.com
27th July 2016

Understanding syndicated inance
Syndicated finance is a typical financing provided by a consortium of financiers by sharing the risk of the obligor
as the amount of the financing is such that it cannot be taken entirely by any single financier. OSMAN ARSLAN
writes.
SYNDICATED FINANCE
By Osman Arslan
For conventional banks, this is a
straightforward structure governed by
a single financing agreement whereas
the Islamic type of the syndicated
structure becomes more complex with
the inclusion of a commodity trade
transaction.
The structure also known as the
Tawarruq arrangement is simply based
on the spot purchase of commodities by
the investment agent on behalf of the
financiers and the deferred sale of such
commodities to the purchaser, whereas
the purchaser would immediately turn
the acquired commodities through an
on-sale into cash.
The benefit of the commodity Murabahah
is that it fixes the return to the investors
without taking any inventory risk in the
subject commodities. This very structure,
however, has been subject to a lot of
controversy for years now as it is not a
genuine economic transaction since the
ultimate aim of the obligor is not to gain
possession of the commodities but rather
to receive cash derived from it.
Despite the fact that syndicated
commodity Murabahah are widely
applied financing tools among the
Islamic banks, we see that Shariah
scholars are not unanimously contented
with its extensive application in the
syndicated market.
The lack of alternative underlying assets
in sucient amounts caused precious
metals traded in liquid markets to
become the adequate commodity in
the syndicated Murabahah finance
market for years. However, we are also
witnessing the emergence of alternative
structures such as using Sukuk
certificates listed in exchange markets
instead of commodities. Contrary to
the metal trade-based commodity
Murabahah, this seems to be a genuine
trade transaction where the bank has
the option to either hold the Sukuk
certificates in its portfolio with the
anticipation of a capital gain and benefit
SECTOR
FEATURE
from the interim cash flows or implement
an on-sale if there is an immediate need
for cash.
The introduction of Sukuk certificates,
apart from its expansion and ease of
execution, however is again subject
to further scrutiny from scholars.
Furthermore, the purchase and sale of
Sukuk certificates in a syndicated finance
facility also depend on the availability
of Sukuk certificates which are subject
to the availability of adequate assets to
serve as the underlying pool for Sukuk
fine with the expected profit and is sure
certificates being purchased and sold in
that all investments made by the Wakeel
syndicated Murabahah facilities.
are Shariah compliant.
Syndicated Nevertheless, as the study for market
acceptable alternative structures
inance and
continues, the commodity Murabahah
structure still appears to be the main
Sukuk issuance will
structure enabling Islamic banks to tap
Islamic syndicated markets to facilitate
remain vital sources their cash financing needs. Islamic banks
have been demonstrating higher growth
for Islamic banks as than their conventional peers for years
both in the GCC and elsewhere in the
part of the expansion world. For Islamic banks to meet the
continuously increasing demand for
of their investor base Shariah compliant products and services,
the mere reliance on equity and funds
and globalization collected is definitely not sucient to
fuel further growth in the Islamic finance
strategies beyond industry. That is why syndicated finance
and Sukuk issuance will remain vital
their local sources for Islamic banks as part of the
expansion of their investor base and
markets globalization strategies beyond their local
markets.
Amid discussions on the Tawarruq
Having conventional banks as
arrangement used in the syndicated
participants in syndicated Murabahah
finance market, the requirement for an
facilities also stipulates the existence of a
acceptable and decent economic
fixed return. Unfortunately, demand and
transaction to take place might force the
participation from the conventional side
end of the product life of the Tawarruq
would severely shrink if Islamic banks
arrangement for Islamic banks if the
were to use a Wakalah-based syndicated
industry can come up with a globally
finance with an expected profit element
accepted and applicable Shariah
envisaged for the participants. This,
compliant trading alternative to facilitate
however, might be mitigated through
the ongoing growth in the syndicated
additional steps such as the Wakeels
finance market.
commitment not to place funds below
a certain threshold rate. Wakalah-based
Osman Arslan is CEO of Ziraat
financing seems to have common ground
Participation Bank. He can be contacted at
between fully-fledged Islamic banks on
reyhan.imac@ziraatkatilim.com.tr.
a bilateral basis where the Muwakeel is
20 27th July 2016

DEALS
Besraya (M)s Sukuk due
MALAYSIA: The principal redemption
and periodic payment for Besraya (M)s
RM700 million (US$174.72 million)
Sukuk Mudarabah will be due and
payable on the 28th July 2016, according
to an announcement on Bank Negara
Malaysias website.
Mobarakeh Steel Company
sells Sukuk
IRAN: Mobarakeh Steel Company,
Irans largest steelmaker, has raised
IRR1 trillion (US$33.2 million) from the
sale of Sukuk Murabahah which pays a
20% profit rate per annum at quarterly
intervals, according to Financial Tribune.
The Islamic certificates were sold via
the over-the-counter market of Iran Fara
Bourse.
Togo to issue Sukuk
TOGO: Togo has launched a XOF150
billion (US$250.99 million) 10-year Sukuk
oering with a 6.5% profit margin,
according to its prospectus, and the
subscription period for this facility will
run until the 10th August 2016, with a
possibility of early closing. The Islamic
Corporation for the Development of the
Private Sector is the lead arranger while
DEAL TRACKER
EXPECTEDDATE COMPANY'S NAME
August 2016 Republic of Togo
August-September DanaInfra Nasional
2016
TBA Ekovest
September 2016 Government of Kuwait
July 2016 Government of Senegal
TBA Maxis Broadband
July 2016 Sarawak Hidro
TBA Iranian Mines and Mining
Industries Development and
Renovation Organization
TBA Neelum Jhelum Hydropower PKR100 billion
Company
AFRICA
Uganda to introduce Islamic
microinancing by 2017
UGANDA: The government of Uganda,
through the Microfinance Support Center
NEWS
lead managers comprise SGI African
Stock Exchange (Attijariwafa Bank), BOA
Capital Securities (BMCE Bank of Africa),
Coris Bourse (Coris Bank International),
Ecobank Development Corporation
(ETI) and Management Company and
intermediation of Togo (Togo SGI).
Proceeds from the facility will be used to
finance the countrys economic and social
development projects.
AEON Credit sells Sukuk
MALAYSIA: AEON Credit made
the second issuance of the Islamic
commercial papers with a nominal value
of RM20 million (US$4.92 million) and
a tenor of one month on the 22nd July,
according to a bourse filing. Proceeds
from the facility will be utilized for the
companys Shariah compliant working
capital purposes.
Jambatan Kedua issues Sukuk
Murabahah
MALAYSIA: Jambatan Kedua, the
concessionaire of Penangs second
bridge project, on the 21st July issued a
RM2.6 billion (US$636.7 million) Sukuk
Murabahah program, the firm confirmed
with IFN. The unrated program was
oered in multiple tenors: seven, 10, 15
and 25 years, with profit rates ranging
from 3.91% to 4.86%. AmInvestment
SIZE STRUCTURE
XOF150 billion Sukuk
RM10 billion Sukuk
RM3.64 billion Sukuk Wakalah
up to KWD5 billion Sukuk
XOF150 billion Sukuk
TBA Sukuk Murabahah
RM5.5 billion Sukuk
IRR4 trillion Sukuk Musharakah
Sukuk
(MSC) in partnership with the IDB, will
soon introduce Islamic microfinancing
models in the country as part of the Rural
Income and Employment Enhancement
Project (RIEEP) and will take eect in
the 2016/2017 financial year, announced
the MSC. The MSC is the implementing
21
Bank, Kenanga Investment Bank,
Maybank Investment Bank and RHB
Islamic Bank acted as the lead managers,
principal advisors and bookrunners for
the tradable facility.
Indonesia auctions Sukuk
INDONESIA: The government of
Indonesia is targeting to raise IDR4
trillion (US$305.6 million) through
the sale of its sovereign Sukuk (SPN-S
27012017 and four project-based
securities series) conducted on the
26th July 2016 in a bid to finance the
Republics 2016 State Budget, according
to an announcement on the Ministry of
Finances website.
Malaysias GII Murabahah
oversubscribed
MALAYSIA: Malaysias government
investment issue (GII) Murabahah
issuance of RM3.5 billion (US$866.49
million) with a profit rate of 3.74% has
been oversubscribed by 2.45 times after
receiving total bids of 211 with a total
amount of RM8.59 billion (US$2.13
billion), according to an announcement
on Bank Negara Malaysias website. The
facility will mature on the 26th August
2021 and BNM may purchase up to 10%
of the issuance size.
Full Deal Tracker on page 28
ANNOUNCEMENT DATE
26th July 2016
19th July 2016
19th July 2016
4th July 2016
30th June 2016
30th June 2016
28th June 2016
24th June 2016
23rd June 2016
unit and is working together with the
Ministry of Finance, Planning and
Economic Development in preparation
for the launch of three Islamic
microfinancing models of Musharakah,
Mudarabah and Murabahah.
27th July 2016

ASIA
New Islamic banking player in
Bangladesh
BANGLADESH: IFN understands
from a senior industry source that
Standard Banks Islamic banking license
application has been approved by the
central bank of Bangladesh. An ocial
announcement is expected to be made
within the next two weeks.
Bank Islam Malaysia to
inance Waqf projects
MALAYSIA: Bank Islam Malaysia has
inked an agreement with Urus Maju
Ehsan, a subsidiary of Perbadanan
Wakaf Selangor, to provide RM15.5
million (US$3.8 million) in financing for
two Waqf land development projects in
Selangor. The two projects, according to a
press statement, consist of developing an
apartment, shop lots and shop oces.
GLOBAL
Clyde & Co plans Islamic
expansion
GLOBAL: Clyde & Co is looking
to Southeast Asia for expansion
possibilities. A new oce in South
Korea has already been confirmed, and
EUROPE
Al Rayan sees growth in expat
market
UK: Al Rayan Bank has seen a 141%
increase in annual expat property
financing since 2013, with 15% of
new retail property financing from
expats generated between January and
May 2016, the Islamic bank said in a
statement.
Bank Asyas license canceled
TURKEY: Following the suspension of
Bank Asyas operations on the 18th July by
the Turkish Deposit Insurance Fund as
the sale of the participation bank failed
to attract bids, the Banking Regulation
and Supervision Agency has canceled
Bank Asyas banking license, the bank
confirmed in a statement.
NEWS
Fintech regulation to be out in
fourth quarter
MALAYSIA: Bank Negara Malaysia
(BNM) will issue a consultative paper
on financial technology (fintech) this
month, seeking industry comments and
feedback, according to state news agency
Bernama quoting BNMs governor,
Muhammad Ibrahim. The regulatory
framework enabling the adoption of
fintech is expected to be released in the
fourth quarter of 2016.
AFG plans merger with
banking unit
MALAYSIA: Alliance Financial Group
(AFG) is planning to merge with its
wholly-owned subsidiary Alliance
Bank Malaysia, which in turn wholly
owns Alliance Islamic Bank, Alliance
Investment Bank, Alliance Direct
Marketing, AllianceGroup Nominees
(Tempatan) and AllianceGroup
other possible locations are currently
under consideration. The firm is gaining
particular traction in Indonesia, where
it already has an association with local
law firm LGS, according to head of
Islamic finance Adil Hussein. We will
be focusing on developing our Southeast
Asian Islamic finance practice over the
next 12 months, he confirmed to IFN.
MIDDLE EAST
Jordan looks to Islamic
inance
JORDAN: The government of Jordan
will be using Islamic finance to support
the Hashemite Kingdoms endowment
projects and investment portfolios,
announced Minister of Planning
and International Cooperation Imad
Fakhoury, as reported by Jordan Times.
This is among a raft of initiatives
introduced by the government including
developing a comprehensive program
to introduce people to the financing and
loans available to Jordanians to start
SMEs.
MEAHCO procures Islamic
inancing facility
SAUDI ARABIA: Samba Financial
Group and Middle East Healthcare
Company (MEAHCO) have signed
an Islamic credit facility agreement
22
Nominees (Asing), and it is just a matter
of submitting applications to Bank
Negara Malaysia and other authorities
for approvals, according to The Edge
Markets quoting AFGs chairman Oh
Chong Peng. Oh also said that the
reorganization, which is expected to be
done within a year, is unlikely to involve
any additional fundraising.
Bank Muamalats socially
responsible debit card
MALAYSIA: Bank Muamalat Malaysia
will contribute 20% of the interchange fee
income from its newly launched Aisya
debit card to Waqf collection, according
to a press release. The new debit card is
said to be the first of its kind in Malaysia
to incorporate spending with socially
responsible features of Waqf, and the
card also complies with the banking
requirements advocated by Bank Negara
Malaysia.
Amana and Al Zaman
collaborate
GLOBAL: Amana Bank, an Islamic
bank based in Sri Lanka, has forged
a partnership with Qatars Al Zaman
Exchange to launch an instant money
remittance service to Sri Lanka, according
to The Peninsula.
(Murabahah) worth SAR200 million
(US$53.29 million) for the latter to
finance its working capital, according to
a bourse filing. The facility is backed by
a promissory note from MEAHCO and
the repayment is over eight quarterly
installments starting three months after
the disbursal.
Noor Investments pursues
legal case against TID
KUWAIT: Noor Investments of Kuwait
has brought a case to the Court of Appeal
to have The Investment Dar (TID)
declared bankrupt. The court will hear
the review of its committee of experts
on the 26th October; meanwhile TID in
a statement to investors said it is ready
to cooperate fully with investor groups
who wish to work toward a consensual
solution to the Islamic investment firms
problems. Until a solution is found, the
management has the mandate from
TIDs board to pursue all necessary
27th July 2016
 NEWS

legal channels and structures in the best

interest of all stakeholders.

Meethaq opens 14th branch

OMAN: Meethaq, an Islamic banking
arm of Bank Muscat, has inaugurated
its 14th branch in Corniche, Muttrah,
according to the Times of Oman.

RESULTS
Islamic Holding Group
QATAR: Islamic Holding Groups first
half net profit came in 84% lower year-
on-year at QAR954,078 (US$261,920)
compared with QAR6.04 million

FORUM
(US$1.66 million) for the same period of
the previous year, according to a bourse
filing. Earnings per share amounted to
QAR0.18 (4.94 US cents) compared with
QAR1.51 (41.45 US cents) in the first half
of 2015.
TURKEY
2016
Takaful Oman Insurance
OMAN: Takaful Oman Insurance posted #IFNTurkey16
a profit of OMR1.62 million (US$4.2
million) in the first half of 2016, double
that of the OMR814,316 (US$2.11 million)
the company recorded in the same period IFN Turkey Forum
in the previous year, according to a filing 28th September 2016
to Muscat Securities Market. Its Wakalah Borsa Istanbul
fees came in at OMR2.7 million (US$6.99
million) for the period compared with
Turkey is another upcoming market for Islamic finance and one which many players have long had their eyes on.
OMR1.36 million (US$3.52 million) in the
first half of 2015. With a strong commitment from the Turkish authorities, the industry continues to flourish and IFN Turkey remains
one of our strongest and longest-running events.
Saudi British Bank
SAUDI ARABIA: Saudi British Bank, As the country steps up its Shariah compliant activities, new players, new regulations and new issuances make for
which oers Islamic financial solutions, a vibrant market driven by growing investor interest both domestic and international. With exceptional support
posted a net profit of SAR1.15 billion from the Turkish regulators making this a truly progressive event, IFN Turkey returns to the excellent facilities of
(US$306.45 million) during the second Borsa Istanbul for its 2016 incarnation.
quarter this year, a marginal 1.23%
increase year-on-year from SAR1.14
billion (US$303.79 million) the bank
recorded in the similar quarter in 2015,
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www.REDmoneyevents.com
according to a bourse filing.

National Bank of Fujairah

UAE: For the first six months of 2016, IN PARTNERSHIP WITH LEAD PARTNER MULTILATERAL STRATEGIC PARTNER ASSOCIATE PARTNER
National Bank of Fujairah (NBF) saw
its net profit slide 9.4% year-on-year to
AED275.1 million (US$74.88 million) EXECUTIVE PARTNERS
while its net impairment losses expanded
to AED154.7 million (US$42.84 million)
from AED86.9 million (US$23.65 million) LUNCHEON SPONSOR LEAD MEDIA PARTNER INFORMATION PARTNER RESEARCH PARTNER
in 2015, reflecting NBFs prudent loan
loss provisions in response to the more
challenging operating environment. MEDIA PARTNERS

According to a statement, NBFs

operating income, however, experienced
a growth of 8.5% while its net interest W: www.redmoneyevents.com | E: emerson.dinesh@redmoneygroup.com | T: 603 2162 7800 ext. 43 | Twitter : #IFNTurkey16

23 27th July 2016


income and net income from Islamic
financing and investment activities grew
by 5.8%.
Saudi Hollandi Bank
SAUDI ARABIA: Saudi Hollandi Bank
reported a decline by 2.49% in net profit
to SAR1.05 billion (US$279.81 million)
for the first six months of 2016 against
SAR1.08 billion (US$287.8 million) in
the similar period in 2015, according
to a bourse filing. The bank, however,
witnessed a 6.22% increase in total assets
for the reported period to SAR108.64
billion (US$28.95 billion).
Qatar International Islamic
Bank
QATAR: Qatar International Islamic
Bank posted a net profit of QAR443
million (US$121.62 million) in the first
half of 2016, representing a 1.1% growth
year-on-year compared with QAR438
million (US$120.24 million) it recorded
in the same period of the previous year,
according to a press release. Total assets
for the period grew 9.8% to QAR42.3
billion (US$11.61 billion) from QAR38.5
billion (US$10.57 billion) for the same
period of 2015.
Samba Financial Group
SAUDI ARABIA: Samba Financial
Groups net profit for the first half of
2016 shrunk by 1.41% to SAR2.57 billion
(US$684.86 million) compared with
SAR2.61 billion (US$695.52 million)
achieved in the similar period in 2015,
according to a filing to Tadawul. Sambas
total assets expanded 3.57% to SAR233.99
billion (US$62.35 billion) as at the end of
June 2016.
Abu Dhabi Commercial Bank
UAE: Abu Dhabi Commercial Bank,
which operates Islamic banking activities,
reported a net profit of AED2.15 billion
(US$585.19 million) in the first half of
2016, 15% lower year-on-year compared
with AED2.53 billion (US$688.62 million)
the bank recorded in the similar period
of the previous year, according to a
statement. Total net interest and Islamic
financing income, meanwhile, was 2.52%
lower at AED3.1 billion (US$843.76
million) for the period compared with
AED3.18 billion (US$865.53 million) in
the first half of 2015.
Bank Aljazira
SAUDI ARABIA: Shariah compliant
Bank Aljazira reported a net profit of
SAR178 million (US$47.45 million) for
NEWS
the second quarter of 2016, 75.82% lower
year-on-year compared with SAR736
million (US$196.18 million) it posted in
the similar quarter of the previous year,
according to a bourse filing.
Mashreq
UAE: Mashreq recorded a 1.4% quarter-
on-quarter growth in net profit to
AED539 million (US$146.71 million)
in the April-June period of 2016 while
its net interest income, income from
Islamic financing and interest earned
on marketable securities rose 3.6% from
AED900 million (US$244.96 million)
in the previous quarter, according to a
statement. The banks total assets for
the first half of 2016 declined 0.4% to
AED114.7 billion (US$31.22 billion).
Alinma Bank
SAUDI ARABIA: Alinma Bank reported
a 12.83% growth in net profit in the first
six months of 2016 to SAR800 million
(US$213.24 million). According to its
interim financial results, the increase was
due to a 15% decline in total operating
expenses. Total assets were up 19.97% to
SAR98.19 billion (US$26.17 billion).
Arab National Bank
SAUDI ARABIA: Arab National Bank,
which oers Islamic products, reported
a 2.41% year-on-year drop in net profit
to SAR1.57 billion (US$418.48 million) in
the first six months of 2016 as a result of a
3.4% increase in total operating expenses,
according to a bourse filing. Total assets
edged up 0.09% to SAR166.58 billion
(US$44.4 billion).
Warba Bank
KUWAIT: Warba Bank registered a
44% surge in net profit to KWD455,000
(US$1.5 million) in the first half of 2016
against the same period in 2015 on the
back of a 50% growth in total revenues
to KWD16.7 million (US$55.17 million),
according to the state news agency.
Total assets for the Islamic bank stood at
KWD918 million (US$3.03 billion) at the
end of June 2016.
Alinma Tokio Marine Co
SAUDI ARABIA: Alinma Tokio Marine
Co reported a net loss of SAR18.26
million (US$4.86 million) for the six-
month period ending the 30th June 2016,
an increase of 33.77% from last years
SAR13.65 million (US$3.64 million).
According to a bourse filing, net loss for
the current quarter expanded by 45.8% to
SAR10.83 million (US$2.89 million) from
24
the previous quarters SAR7.43 million
(US$1.98 million).
Labuan IBFC
MALAYSIA: Labuan International
Business and Financial Center (Labuan
IBFC) saw Islamic financing increase
by 55% to US$1.8 billion in 2015 against
US$993.3 million the year before.
According to its annual report, non-
residents dominated 77.3% of total
Islamic financing.
Tawuniya
SAUDI ARABIA: The Company for
Cooperative Insurance (Tawuniya)
reported a 3.32% year-on-year decline in
pre-Zakat net profit to SAR305.42 million
(US$81.41 million) in the first half of
2016, according to its interim financial
results. Net written premiums for the
period were up 23.15% to SAR3.31 billion
(US$882.26 million).
Sharjah Islamic Bank
UAE: For the first six months of 2016,
Sharjah Islamic Bank expanded its
net profit by 25.6% to AED257 million
(US$69.97 million) from AED204.6
million (US$55.7 million) in the similar
period in 2015, with total assets for the
reported period reaching AED29.8 billion
(US$8.11 billion). According to a press
release, the bank also repaid its US$400
million Sukuk via its own sources,
highlighting its excellent liquidity
position.
Bank Islami Pakistan
PAKISTAN: Bank Islami Pakistan in
a bourse filing reported a net profit of
PKR125.4 million (US$1.2 million) for the
quarter ended March 2016, a 76% jump
year-on-year from the PKR71.28 million
(US679,504) it recorded in the similar
quarter of the previous year.
Al Rajhi Company for
Cooperative Insurance
SAUDI ARABIA: Al Rajhi Company for
Cooperative Insurance has expanded its
second quarter net profit before Zakat
by 179.04% to SAR24.43 million (US$6.51
million) from the previous quarters
SAR8.76 million (US$2.33 million) on the
back of an increase in net contributions
earned of 11.24% and realization of
policyholder and shareholder investment
income. According to a bourse filing, Al
Rajhis net profit before Zakat for the first
six months of 2016 stood at SAR33.19
million (US$8.84 million), up 49.73%
year-on-year.
27th July 2016
 NEWS

Sabana REIT of 2016, a decline of 10.9% from SG$25.41 in its net property income to SG$13.97
SINGAPORE: Sabana REIT reported million (US$18.69 million) in 2015, million (US$10.27 million) in the reported
a gross revenue of SG$22.63 million according to a statement. The trust also period.
(US$16.64 million) in the second quarter observed a 24.3% year-on-year decline

ASSET
consideration for the transfer was based a statement has directed all asset
on the cost of investment of AIGB in management companies (AMCs) to
AmFunds and AIFM. calculate and disclose the total expense

MANAGEMENT SC amends unit trust

ratio (TER) of all mutual funds under
their management in a bid to bring
Bursa Malaysia to enhance CIS guidelines
about uniformity in the mutual fund
industry and provide investors with an
framework MALAYSIA: The Securities Commission opportunity to make informed decisions
MALAYSIA: Bursa Malaysia has Malaysia (SC) has amended the relevant based on enhanced disclosures. The
published a consultation paper guidelines for the unit trust industry as directive also requires AMCs to disclose
proposing to enhance the collective part of initiatives aimed at enhancing the TER in periodic financial statements
investment scheme (CIS) regulatory the competitiveness and eciency of the of the mutual fund and in a monthly
framework and is seeking feedback industry. According to a statement, key fund managers report.
from the public on the proposals until changes include an expedited approval
the 19th September 2016, according to a process for non-complex retail unit trust Separately, the SECP also urged the
statement. funds to reduce time-to-market and Mutual Funds Association of Pakistan
removing the need for prospectuses to be to ensure that retail investors are not
Internal reorganization for renewed on an annual basis for greater charged any upfront commission on
operational eciency. The amendments
AMMB to the relevant guidelines will take eect
investments in mutual funds, unless
MALAYSIA: AMMB Holdings on the these investors have first been fully
on the 15th August 2016. informed about it. The SECP will also
21st July acquired 100% shareholding in
AmIslamic Funds Management (AIFM) conduct a study on the sales practices of
and AmFunds Management from New standards for mutual the mutual fund industry, and will take
AmInvestment Group (AIGB) which fund industry strict action against any AMCs whose
is wholly owned by AMMB. AMMB PAKISTAN: The Securities and Exchange sales team is found to be mis-selling.
in an announcement noted that the Commission of Pakistan (SECP) in

SHARIAH NON-COMPLIANCE
RESTRUCTURING & WORKOUTS RISK MANAGEMENT & REPORTING
FOR ISLAMIC FINANCE FACILITIES FOR ISLAMIC BANKING & FINANCE
20th September 2016 16th August 2016
DoubleTree Hotel, Kuala Lumpur DoubleTree Hotel, Kuala Lumpur
SIDC CPE - accredited: 10 CPE Points
As the Islamic banking industry continues to develop and mature, the occurrence of defaults and the need for rescheduling
and refinancing become inevitable. Given the lack of precedent in handling such cases, a clear legislative and regulatory
framework is required to ensure adherence and compliance to Shariah principles and other regulations. Shariah non-compliance risk has been defined as The risk that arises from the banks failure to comply with the Shariah rules and
principles determined by the relevant Shariah regulatory councils.(IFSB). This timely one day course sets out Shariah compliance
This one day multi-speaker seminar will provide bankers, lawyers and scholars involved in Islamic finance with a clear and governance requirements under Malaysian law. It also discusses the role of compliance and Shariah compliance functions,
analysis and understanding of the key regulatory and Shariah issues surrounding restructuring of Islamic finance facilities as as well as specifically the obligations, procedures, disclosure and reporting requirements and rectification options in the case of
well as crucial legal, procedural, documentation and accounting issues to consider when defaults occur. Shariah non-compliance.

HIGHLIGHTS HIGHLIGHTS
BNM guidelines on Rescheduled and Restructured Financing t
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Panel Speakers: Shariah Advisory Council, Group Shariah Business Compliance,
Mohd. Johan Lee Dato' Mohd Arief Emran bin Arifin Bank Negara Malaysia and Deputy Dean, IIUM Group Risk, Compliance & Credit
Managing Partner, Partner, Institute of Islamic Banking and Finance Management, RHB Islamic
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25 27th July 2016


RATINGS
KFHs ratings afirmed
KUWAIT: Capital Intelligence in a
statement confirmed the financial
strength rating of Kuwait Finance House
(KFH) at BBB supported by KFHs
dominance of the Islamic banking sector
in Kuwait as well as its large overall
market share in both deposits and
loans, and by the significantly improved
equity base following the June 2013
rights issue. The Islamic banks support
rating is maintained at 1 and its long-
term foreign currency and short-term
foreign currency ratings at A and A1
respectively with all ratings carrying a
stable outlook.
Albaraka Insurance Company
receives BBB rating
SUDAN: The Islamic International
Rating Agency has assigned a Takaful
financial strength rating of BBB to
AlBaraka Insurance Company with a
stable outlook, according to a statement.
The fiduciary score was assessed in the
range of 61-65, reflecting adequate
fiduciary standards.
RAM reafirms Encorp
Systembilts Sukuk
MALAYSIA: RAM has rearmed
the AA2/Positive rating on Encorp
Systembilt (ESSB)s RM1.58 billion
(US$394.36 million) Sukuk Murabahah,
according to a statement. The
rearmation reflects the rating agencys
expectation that ESSBs debt-servicing
aptitude would continue to improve
on the back of cash accumulation via
consistent concession payments from
the government and a solid investment
income performance.
RAM reafirms West Coast
Expressways Sukuk
MALAYSIA: RAM has rearmed the
ratings on Tranche 1 and Tranche 2 of
West Coast Expressways RM1 billion
(US$249.59 million) guaranteed Sukuk
Murabahah program (2015/2036) at
AAA(bg)/Stable and AAA(fg)/Stable
respectively, according to a statement.
The ratings reflect irrevocable and
unconditional Kafalah extended by
AAA-rated Bank Pembangunan
Malaysia and Danajamin Nasional,
which enhance the Sukuks ratings
beyond West Coasts stand-alone credit
strength.
NEWS
Bank Asyas ratings
withdrawn
TURKEY: Islamic International Rating
Agency (IIRA) has withdrawn Bank
Asyas B-/B ratings on both the foreign
and local currency international scale
and its B+(tr)/B(tr) ratings on the
national scale, due to the non-renewal
of the rating agreement, according to a
statement.
Moodys afirms ratings of
EXIM Sukuk Malaysia
MALAYSIA: Moodys has armed the
A3 long-term ratings of Export-Import
Bank of Malaysia (EXIM) Sukuk Malaysia
with a stable outlook, according to a
statement. The rating agency similarly
armed the A3 long-term foreign
currency issuer and senior unsecured
ratings of EXIM, with a stable outlook.
Rating agencies evaluate
Turkey post-coup attempt
TURKEY: As a result of the attempted
coup in Turkey on the 16th July and the
subsequent political polarization, the
downside risks for Turkish banks credit
profiles and ratings have increased,
according to Fitch. The rating agency
continues to view the Turkish banking
sectors as fundamentally sound. There
has been little evidence of deposit
instability triggered by the attempted
coup, and the central bank has indicated
its readiness to provide liquidity support
to the sector, it said in a statement.
The potential negative implications
on Turkeys sovereign rating and
economy as well as the ratings on its
banks (particularly Kuveyt Turk Katilim
Bankasi and Turkiye Finans Katilim
Bankasi) arising from the coup attempt
are also being evaluated by RAM. The
rating agency said in a statement that the
countrys account position and external
reserves will weaken further and as a
result, GDP growth is expected to drop
from its previous 3.2% forecast.
Omani banks credit growth a
credit negative
OMAN: Moodys said in a statement that
the 13.5% growth in total credit extended
by Omans conventional and Islamic
banks over the last 12 months that ended
in May and that materially exceeded
the low 0.4% growth in total deposits
(according to the Central Bank of Omans
May 2016 Monthly Statistical Bulletin),
is a credit negative for Omani banks.
26
The gap between credit and deposit
growth is widening and has increased
the system average net financing/deposit
ratio to 108.4% as of May 2016, compared
with 95.8% as of May 2015 and 103.5%
as of December 2015, and this financing
gap negatively aects banks funding
and liquidity profiles, the rating agency
noted. There are two Islamic banks
in Oman, and six conventional banks
operating Shariah windows.
Axiata SPV2s Sukuk facility
assigned inal rating
MALAYSIA: The US$500 million
Sukuk facility issued by Axiata SPV2 (a
subsidiary of Axiata Group) has been
assigned a definitive Baa2 rating by
Moodys. The paper is drawn down from
its existing US$1.5 billion multi-currency
Sukuk program.
Sepangar Bays Sukuk
reafirmed
MALAYSIA: Sepangar Bay Power
Corporations RM575 million (US$141.45
million) nominal value Sukuk
Murabahah program has been rearmed
at AA1/Stable by RAM based on the
companys robust cash flow-generation
to service debt obligations, supported by
the favorable terms of its power purchase
agreement with its sole otaker, Sabah
Electricity, the rating agency said in a
statement.
RAM reafirms Batu Kawans
Islamic notes
MALAYSIA: RAM has rearmed the
AA1/Stable rating on Batu Kawans
Islamic medium-term note program
of up to RM500 million (US$122.42
million), according to a statement. The
rating agency noted that although the
companys credit metrics had not met
expectations and could remain soft over
the next one to two years, Batu Kawan
is suciently mitigated by the groups
robust cash reserves and still strong
balance sheet.
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27th July 2016

TAKAFUL
GETB to offer new products
MALAYSIA: Great Eastern Takaful
(GETB) will be launching six new
products: three bancaTakaful products
and three under agency distribution
channels, the Takaful operator confirmed
to IFN.
Capital Financial to establish
Takaful unit
INDONESIA: Capital Financial
Indonesia plans to establish two new
subsidiaries, namely Capital Life Syariah
and Capital Global Ventura, with fresh
capital raised from its IPO, according to
The Jakarta Post. The group is expecting
to raise IDR715 billion (US$54.63 million)
by divesting to the public its 5.5 billion
shares or 47.61% of its total capital with
92% of the funds raised via IPO to be
injected into its life insurance subsidiary
as capital while 7.45% is to be used to
build its Takaful unit and injected into
the venture capital. Capital Financials
president director, Hengky Setiono,
MOVES
MCB Bank
PAKISTAN: MCB Bank, which owns
MCB Islamic Bank, has appointed Irfan
Ahmed Hashmi as a director with
eect from the 14th July 2016, replacing
Sarmad Amin, subject to approval from
the State Bank of Pakistan, according to
an announcement to the Pakistan Stock
Exchange.
CEBC
UAE: The Clean Energy Business Council
(CEBC) has appointed Dr Nasser Saidi
and Mhairi Main Garcia as the chair
and vice-chair respectively for the next
two-year term, according to a press
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NEWS
was reported as saying that the reason
the majority of the funds raised will be
going to its life insurance subsidiary was
because it has big potential to grow amid
small insurance penetration of below
2%.
QCB issues new circular for
insurance industry
QATAR: Qatar Central Bank has
issued a circular allowing insurance
and reinsurance and also Takaful and
re-Takaful companies working in the
country to impose a higher premium on
motorists who have caused accidents or
violated trac laws. The new initiative is
expected to contribute toward improving
the conduct of road users and attaining
trac safety on the road.
Al Alamiya gets SRBs
approval
SAUDI ARABIA: Shariyah Review
Bureau (SRB) has granted approval to
Al Alamiya for Cooperative Insurance
Company for the following functions:
separation of accounts (shareholder and
release. The appointment coincides with
the Green Sukuk Working Group adding
several CEBC members namely Ashurst,
Latham & Watkins and National Bank
of Abu Dhabi to its membership, along
with Amanie Advisors, HSBC and S&P.
The group is the first of its kind set up
to finance renewable energy projects
through the issuance of Sukuk in the
MENA region.
Turkiye Finans
TURKEY: Four executive vice-presidents
(EVPs) of Turkiye Finans Katilim
Bankasi have resigned, the Islamic
bank confirmed with IFN. They are:
Erol Gorgun, EVP of risk monitoring,
collections and legal; Dursun Arslan,
27
policyholder); compliance of shareholder
and policyholder investments with
Shariah guidelines; and review and
amend the companys insurance policy
which is to be submitted for final
approval to the Saudi Arabian Monetary
Agency. SRB will lead the ongoing
supervision and monitoring of the
companys aforementioned functions
and related processes from a Shariah
perspective and will also conduct
Shariah audits to evaluate the extent
of its adherence with directed Shariah
policies and guidelines and to report any
defective processes.
Amana Takaful Lifes IPO
successful
SRI LANKA: Amana Takaful Lifes IPO
has been oversubscribed, according to the
companys chairman, Tyeab Akbarally,
reported Daily News. The company
floated 10% of its total stake, or 50 million
ordinary voting shares, at LKR1.5 (1 US
cent) per share on the Colombo Stock
Exchange on the 21st July.
EVP of operations; Menduh Kara, EVP
of commercial banking; and Mustafa
Saglam, EVP of retail banking and
distribution network.
The respective departments deputy
EVPs are currently standing in as acting
EVPs.
Al Rajhi Bank Malaysia
MALAYSIA: Al Rajhi Bank Malaysia
has appointed Dr Nik Norzrul Thani
Nik Hassan Thani as its new chairman,
eective the 13th July 2016, according to
a statement. Nik Norzrul was previously
the acting chairman and has served as a
board member of the bank since 2006.
27th July 2016
 DEAL TRACKER

Expected date Company's name Size Structure Announcement Date

August 2016 Republic of Togo XOF150 billion Sukuk 26th July 2016
August-September DanaInfra Nasional RM10 billion Sukuk 19th July 2016
2016
TBA Ekovest RM3.64 billion Sukuk Wakalah 19th July 2016
September 2016 Government of Kuwait up to KWD5 billion Sukuk 4th July 2016
July 2016 Government of Senegal XOF150 billion Sukuk 30th June 2016
TBA Maxis Broadband TBA Sukuk Murabahah 30th June 2016
July 2016 Sarawak Hidro RM5.5 billion Sukuk 28th June 2016
TBA Iranian Mines and Mining IRR4 trillion Sukuk Musharakah 24th June 2016
Industries Development and
Renovation Organization
TBA Neelum Jhelum Hydropower PKR100 billion Sukuk 23rd June 2016
Company
TBA Government of Oman US$2.5 billion Sukuk 20th June 2016
Second quarter of 2016 Bank Albilad up to SAR2 billion Sukuk 20th June 2016
TBA Tiga Pilar Sejahtera Food IDR1.5 trillion Sukuk 17th June 2016
Jul-16 Public Sector Home Financing RM25 billion Sukuk/Bonds 13th June 2016
Board
TBA Almarai Company TBA Sukuk 10th June 2016
By the end of 2017 Ministry of Housing Saudi TBA Sukuk 9th June 2016
Arabia
TBA Mahan Air IRR5 trillion Sukuk Ijarah 8th June 2016
TBA The Philippines TBA Sukuk 6th June 2016
Jun-16 Pengurusan Air SPV RM1.4 billion Sukuk 3rd June 2016
TBA GFH Financial Group US$150 million Sukuk 2nd June 2016
TBA Government of Sri Lanka US$1 billion Sukuk 27th May 2016
TBA Saudi Aramco TBA Sukuk 26th May 2016
TBA Al-Tajamaout for Touristic JOD45 million Sukuk Ijarah 24th May 2016
Projects
Third quarter of 2016 Government of Nigeria TBA Sukuk 23rd May 2016
TBA Societe Generale RM1 billion Sukuk 23rd May 2016
TBA Bank Muamalat Malaysia RM1 billion Sukuk Murabahah 23rd May 2016
TBA Bank Rakyat Malaysia RM5 billion Sukuk Murabahah 20th May 2016
TBA Government of Germany US$1 billion Sukuk 18th May 2016
TBA Aktif Bank TRY100 million Sukuk 9th May 2016
By 2017 Republic of Maldives TBA Sukuk 29th April 2016
Second half of 2016 Saudia up to SAR5 billion Sukuk 26th April 2016
By 2017 BRI Syariah TBA Sukuk 21st April 2016
TBA PRAN Foods BDT1 billion Sukuk 11th April 2016
Fourth quarter of 2016 Bank Syariah Mandiri IDR1 trillion Sukuk 5th April 2016
TBA Qatar International Islamic Bank QAR1 billion Sukuk 31st March 2016
2016-17 Sarana Multigriya Finansial IDR200 billion Sukuk 4th March 2016
TBA Ziraat Participation Bank TRY1.5 billion Sukuk 1st March 2016
TBA Hong Kong TBA Sukuk 1st March 2016
TBA Cahya Mata Sarawak RM1 billion Sukuk Ijarah 22nd February 2016
TBA Saudi Electricity Company US$2.5 billion Sukuk 16th February 2016
2016 Kuwait Finance House TBA Sukuk 1st February 2016
TBA Oman Telecommunications US$130 million Sukuk 28th January 2016
March-April 2016 Government of Qatar TBA Sukuk 26th January 2016
2017 Government of Kenya TBA Sukuk 26th January 2016

28 29th July 2016

 REDMONEY SHARIAH
INDEXES

REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
2500 1200

2090 1100

1680 1000

1270 900

860 800

450 700
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
1300 2200

1130 1896

960 1592

790 1288

620 984

450 680
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
1150 2250

1000 1960

850 1670

700 1380

550 1090

400 800
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

SAMI Halal Food Participation (All Cap) 6 months

2250

2110

1970

1830

1690

1550
Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016

29 27th July 2016

 REDMONEY SHARIAH
INDEXES

REDmoney Global Shariah Index Series (All Cap) 6 Months REDmoney Global Shariah Index Series (Large Cap) 6 Months
REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
1400 1250

1210 1080

1020 910

830 740

640 570

450 400
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney Global Shariah Index Series (Medium Cap) 6 Months REDmoney Global Shariah Index Series (Small Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
2250 2450

1900 2060

1550 1670

1200 1280

850 890

500 500
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney Global Shariah

Equities are considered eligible for inclusion Utilities Basis Materials
Telecomunication Services 2% 15%
into the REDmoney Global Shariah Index 2%
Series only if they pass a series of market Consumer Goods Services
15%
related guidelines related to minimum market Technology
capitalization and liquidity as well as country 14%
restrictions.
Energy
8%
Once the index eligible universe is determined Non-Cyclical
Consumer Goods Services
the underlying constituents are screened 7% Financials
using a set of business and financial Shariah 4%
guidelines. Industrials Healthcare
22% 11%

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly
defined and transparent Shariah guidelines defined by Shariyah Review Bureau in Jeddah, Saudi Arabia.

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specific equity performance benchmark with optimized
compliance credibility due to the intensive research conducted to ensure that index constituents do not conflict with the defined Shariah
requirements.

IdealRatings is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index
providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings
is headquartered in San Francisco, California. For more information about IdealRatings visit: www.idealratings.com

For further information regarding REDmoney Indexes contact:

REDmoney Global Shariah Index Series
Andrew Morgan
Managing Director, REDmoney Group
RED Email: Andrew.Morgan@REDmoneygroup.com
Tel +603 2162 7800

30 27th July 2016

 EUREKAHEDGE
FUNDS TABLES

Eurekahedge North America Islamic Fund Index

170
160
150
140
130
120
110
Index Values

100
90
80
70
60
50
May-01

Mar-08

Jan-15
Jul-09
Dec-99

Dec-10
Nov-06
Jun-05

Jun-16
Apr-12
Feb-04
Sep-02

Sep-13
Top 10 Monthly Returns for Global Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 23.29 Ireland
2 AmPrecious Metals AmInvestment Management 13.76 Malaysia
3 BLME Sharia'a Umbrella SICAV-SIF Global Bank of London and The Middle East 0.38 Luxembourg
Sukuk - Class A USD
4 Al Rajhi Global Equity Fund UBS 0.19 Saudi Arabia
5 db x-trackers DJ Islamic Market Titans 100 ETF DB Platinum Advisors 0.18 Luxembourg
6 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 0.14 Saudi Arabia
7 BLME Umbrella Sicav - SIF - USD Income - Class B Bank of London and The Middle East 0.12 Luxembourg
8 Watani KD Money Market National Bank of Kuwait 0.05 Cayman Islands
9 Watani USD Money Market National Bank of Kuwait 0.01 Cayman Islands
10 Oasis Crescent Global Property Equity Oasis Global Management Company (Ireland) -0.10 Ireland
Eurekahedge Islamic Fund Index 1.11
Based on 81.82% of funds which have reported June 2016 returns as at the 21st July 2016
Top 10 Monthly Returns for ALL Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 23.29 Ireland
2 AmPrecious Metals AmInvestment Management 13.76 Malaysia
3 Batavia Dana Saham Syariah Batavia Prosperindo Aset Manajemen 6.10 Indonesia
4 CIMB S&P Ethical Asia Pacific Dividend ETF CIMB-Principal Asset Management (S) 3.02 Singapore
5 Dana Ekuiti Dinamik Manulife Insurance (Malaysia) 2.79 Malaysia
6 Amana Income Saturna Capital 2.34 US
7 NBAD Islamic MENA Growth National Bank of Abu Dhabi 2.19 UAE
8 Pakistan International Element Islamic Asset Arif Habib Investment Management 2.09 Pakistan
Allocation
9 Am-Namaa' Asia-Pacific Equity Growth AmInvestment Management 2.03 Malaysia
10 Public Islamic Sector Select Public Mutual 1.78 Malaysia
Eurekahedge Islamic Fund Index 0.44
st
Based on 54.59% of funds which have reported June 2016 returns as at the 21 July 2016

Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specific duration (yield to date, annualized returns,
monthly returns), Sharpe ratio as well as delve into specific asset classes in the global arena equity, fixed income, money market, commodity, global investing (which
would focus on funds investing with global mandate instead of a specific country or geographical region), fund of funds, real estate as well as the Sortino ratio. Each table
covering the duration, region, asset class and ratio will be featured on a five-week rotational basis.

31 27th July 2016

 EUREKAHEDGE
FUNDS TABLES

Eurekahedge Islamic Fund Fixed Income Index over the last 5 years Eurekahedge Islamic Fund Fixed Income Index over the last 1 year

130 105
125
120 103
115
101
Percentage

Percentage
110
105
99
100
95 97
90
85 95

May-16
Jan-16

Mar-16
Jul-15

Dec-15
Aug-15

Nov-15
Jun-15

Jun-16
Oct-15

Apr-16
Feb-16
Sep-15
May-14

Mar-15

Jan-16
Jul-13

Dec-13

Aug-15
Nov-11
Jun-11

Jun-16
Oct-14
Apr-12

Feb-13
Sep-12

Top 10 Islamic Fund Fixed Income by 3 Months Returns

Fund Fund Manager Performance Measure Fund Domicile
1 MNC Dana Syariah MNC Asset Management 1.87 Indonesia
2 Public Islamic Bond Public Mutual 1.72 Malaysia
3 PB Islamic Bond Public Mutual 1.60 Malaysia
4 AmBon Islam AmInvestment Management 1.59 Malaysia
5 Public Islamic Enhanced Bond Public Mutual 1.49 Malaysia
6 Public Islamic Select Bond Public Mutual 1.20 Malaysia
7 Eastspring Investments Dana Wafi Eastspring Investments 1.18 Malaysia
8 Pacific Dana Murni Pacific Mutual Fund Bhd 1.13 Malaysia
9 BIMB Dana Al-Fakhim BIMB UNIT Trust Management (BUTM) 0.04 Malaysia
10 CIMB Islamic Enhanced Sukuk CIMB-Principal Asset Management -3.34 Malaysia
Eurekahedge Islamic Fund Index 0.71
st
Based on 42.31% of funds which have reported June 2016 returns as at the 21 July 2016
Top 10 Sortino Ratio for ALL Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 CIMB Islamic Money Market CIMB-Principal Asset Management 59.59 Malaysia
2 MNC Dana Syariah MNC Asset Management 17.37 Indonesia
3 Public Islamic Income Public Mutual 11.63 Malaysia
4 Public Islamic Select Bond Public Mutual 6.23 Malaysia
5 PB Islamic Bond Public Mutual 5.72 Malaysia
6 Public Islamic Bond Public Mutual 5.71 Malaysia
7 Oasis Crescent Balanced Stable Fund of Funds Oasis Crescent Management 3.96 South Africa
8 Public Islamic Select Enterprises Public Mutual 2.78 Malaysia
9 Pacific Dana Murni Pacific Mutual Fund 2.43 Malaysia
10 Oasis Crescent Balanced High Equity Fund of Funds Oasis Crescent Management 2.39 South Africa
Eurekahedge Islamic Fund Index 0.13
Based on 54.59% of funds which have reported June 2016 returns as at the 21st July 2016

Contact Eurekahedge
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Disclaimer
Copyright Eurekahedge 2016, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that
reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an as is basis and you assume and will bear all
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originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for any purpose.

32 27th July 2016

 DEALOGIC
LEAGUE TABLES

Most Recent Global Sukuk

Priced Issuer Nationality Instrument Market US$ (mln) Managers
29th Jun 2016 Sultanate of Oman Oman Sukuk Euro market 500 Standard Chartered Bank
public issue
2nd Jun 2016 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 Standard Chartered Bank, HSBC, Emirates
Varlik Kiralama public issue NBD
Anonim Sirketi
2nd Jun 2016 Pengurusan Air SPV Malaysia Sukuk Domestic market 350 CIMB Group, AmInvestment Bank
public issue
31st May 2016 Al Hilal Bank UAE Sukuk Euro market 225 National Bank of Abu Dhabi
private
placement
30th May 2016 GovCo Holdings Malaysia Sukuk Domestic market 306 HSBC, RHB Capital, CIMB Group
public issue
24th May 2016 Noor Bank UAE Sukuk Euro market 500 Standard Chartered Bank, First Gulf Bank,
public issue Dubai Islamic Bank, Sharjah Islamic Bank,
Citigroup, Emirates NBD, Noor Bank
24th May 2016 DP World UAE Sukuk Euro market 1,200 JPMorgan, Deutsche Bank, HSBC, National
public issue Bank of Abu Dhabi, First Gulf Bank,
Barclays, Dubai Islamic Bank, SG Corporate
& Investment Banking, Citigroup, Emirates
NBD
23rd May 2016 EI Sukuk UAE Sukuk Euro market 750 Standard Chartered Bank, HSBC, Arab
public issue Banking Corporation, Maybank, Dubai
Islamic Bank, Emirates NBD, Al Hilal Bank,
Noor Bank
17th May 2016 Cagamas Malaysia Sukuk Domestic market 104 CIMB Group
public issue
11th May 2016 Ezdan Holding Qatar Sukuk Euro market 500 Mashreqbank, HSBC, Abu Dhabi Islamic
Group public issue Bank, Emirates NBD, Barwa Bank
11th May 2016 UEM Sunrise Malaysia Sukuk Domestic market 123 Maybank, CIMB Group
public issue
10th May 2016 Boubyan Bank Kuwait Sukuk Euro market 250 Standard Chartered Bank, HSBC, Kuwait
public issue Finance House, National Bank of Kuwait,
Dubai Islamic Bank, Emirates NBD
28th Apr 2016 Perdana Petroleum Malaysia Sukuk Domestic market 162 UOB
public issue
26th Apr 2016 Barwa Bank Qatar Sukuk Euro market 125 National Bank of Abu Dhabi
private
placement
25th Apr 2016 MEX II Malaysia Sukuk Domestic market 333 CIMB Group
public issue
21st Apr 2016 DanaInfra Nasional Malaysia Sukuk Domestic market 1,164 RHB Capital, Maybank, CIMB
public issue Group, Hong Leong Financial Group,
AmInvestment Bank
20th Apr 2016 Malaysia Sukuk Malaysia Sukuk Euro market 1,500 JPMorgan, HSBC, Maybank, CIMB Group
Global public issue
18th Apr 2016 Kuala Lumpur Malaysia Sukuk Domestic market 128 Maybank, CIMB Group
Kepong public issue
15th Apr 2016 Sarawak Energy Malaysia Sukuk Domestic market 387 RHB Capital, AmInvestment Bank
public issue
6th Apr 2016 Hilal Services Saudi Sukuk Euro market 300 Mizuho, Standard Chartered Bank, HSBC,
Arabia public issue Arab Banking, National Bank of Kuwait,
First Gulf Bank, Dubai Islamic Bank, SG
Corporate & Investment Banking, CIMB
Group, Emirates NBD, Warba Bank, Noor
Bank

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m

8 1500 18 600
Value (US$bn) 16
7 1250 500
Avg Size (US$m) 14
6
1000 12 400
5
10
4 750 300
8
3 500 6 200
2 4
250 100
1 2
0 0 0 0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2015 2016 2011 2012 2013 2014 2015 2016

33 27th July 2016

 DEALOGIC
LEAGUE TABLES

Top 30 Issuers of Global Sukuk 12 Months

Issuer Nationality Instrument Market US$ Iss Managers
(mln) (%)
1 Perusahaan Penerbit Indonesia Sukuk Euro market 2,500 7.5 Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank,
SBSN Indonesia III public issue CIMB Group, Citigroup
2 Jimah East Power Malaysia Sukuk Domestic market 2,100 6.3 HSBC, Maybank, CIMB Group
public issue
3 DanaInfra Nasional Malaysia Sukuk Domestic market 1,891 5.7 HSBC, RHB Capital, Maybank, CIMB Group, AmInvestment
public issue Bank, Hong Leong Financial Group
4 IDB Trust Services Saudi Sukuk Euro market 1,836 5.5 Natixis, Standard Chartered Bank, JPMorgan, National Bank of
Arabia public issue Kuwait, Gulf International Bank, Natixis, CIMB Group, Emirates
NBD
5 Malaysia Sukuk Malaysia Sukuk Euro market 1,500 4.5 JPMorgan, HSBC, Maybank, CIMB Group
Global public issue
6 DP World UAE Sukuk Euro market 1,200 3.6 JPMorgan, Deutsche Bank, HSBC, National Bank of Abu Dhabi,
public issue First Gulf Bank, Barclays, Dubai Islamic Bank, SG Corporate &
Investment Banking, Citigroup, Emirates NBD
7 Prasarana Malaysia Malaysia Sukuk Domestic market 1,192 3.6 RHB Capital, Maybank, Kenanga Investment Bank, CIMB
public issue Group, AmInvestment Bank
8 Sultanate of Oman Oman Sukuk Euro market 1,149 3.4 Bank Muscat, Standard Chartered Bank
public issue
9 Pengurusan Air SPV Malaysia Sukuk Domestic market 1,111 3.3 Maybank, Bank Islam Malaysia, CIMB Group, RHB Capital,
public issue AmInvestment Bank
10 Danga Capital Malaysia Sukuk Domestic market 1,110 3.3 RHB Capital, AmInvestment Bank, Standard Chartered Bank,
public issue DBS, CIMB Group
11 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 3.0 Standard Chartered Bank, HSBC, Emirates NBD, HSBC
Varlik Kiralama public issue
Anonim Sirketi
11 Axiata SPV2 Malaysia Sukuk Euro market 1,000 3.0 Deutsche Bank, CIMB Group, HSBC, Maybank, Bank Mandiri
public issue (Persero)
13 Sarawak Energy Malaysia Sukuk Domestic market 774 2.3 RHB Capital, Kenanga Investment Bank, AmInvestment Bank
public issue
14 Qatar Islamic Bank Qatar Sukuk Euro market 750 2.3 Standard Chartered Bank, HSBC, Citigroup, QInvest, Barwa
public issue Bank, Noor Bank
14 EI Sukuk UAE Sukuk Euro market 750 2.3 Standard Chartered Bank, HSBC, Arab Banking, Maybank,
public issue Dubai Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank
16 Rantau Abang Malaysia Sukuk Domestic market 595 1.8 CIMB Group, AmInvestment Bank, RHB Capital
Capital public issue
17 Sime Darby Malaysia Sukuk Domestic market 535 1.6 Maybank
public issue
18 Arab National Bank Saudi Sukuk Domestic market 533 1.6 JPMorgan, Deutsche Bank, HSBC, Arab National Bank
Arabia public issue
19 Noor Bank UAE Sukuk Euro market 500 1.5 Standard Chartered Bank, First Gulf Bank, Dubai Islamic Bank,
public issue Sharjah Islamic Bank, Citigroup, Emirates NBD, Noor Bank
19 Emirate of Sharjah UAE Sukuk Euro market 500 1.5 Bank of Sharjah, HSBC, Barclays, Dubai Islamic Bank, Sharjah
public issue Islamic Bank, Commerzbank Group
19 Dubai Islamic Bank UAE Sukuk Euro market 500 1.5 Standard Chartered Bank, HSBC, Arab Banking Corporation,
public issue National Bank of Abu Dhabi, Dubai Islamic Bank, Sharjah Islamic
Bank, Emirates NBD
19 Arab Petroleum Saudi Sukuk Euro market 500 1.5 Saudi National Commercial Bank, Standard Chartered Bank,
Investments Arabia public issue Goldman Sachs, First Gulf Bank, Emirates NBD, Noor Bank
23 Hilal Services Saudi Sukuk Euro market 500 1.5 Standard Chartered Bank, Mizuho, HSBC, Arab Banking
Arabia private placement Corporation, National Bank of Kuwait, First Gulf Bank, Dubai
Islamic Bank, SG Corporate & Investment Banking, CIMB
Group, Emirates NBD, Warba Bank, Noor Bank
24 Majid Al Futtaim UAE Sukuk Euro market 499 1.5 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
Properties public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank
25 Ezdan Holding Qatar Sukuk Euro market 497 1.5 Mashreqbank, HSBC, Abu Dhabi Islamic Bank, Emirates NBD,
Group public issue Barwa Bank
26 Cagamas Malaysia Sukuk Domestic market 439 1.3 CIMB Group, Maybank
public issue
27 Almarai Saudi Sukuk Domestic market 427 1.3 HSBC, Samba Capital
Arabia public issue
28 Kuala Lumpur Malaysia Sukuk Domestic market 417 1.3 Maybank, CIMB Group
Kepong public issue
29 Barwa Bank Qatar Sukuk Euro market 375 1.1 National Bank of Abu Dhabi
private placement
30 Kuveyt Turk Kuwait Sukuk Euro market 350 1.1 HSBC, Kuwait Finance House, Dubai Islamic Bank, Abu Dhabi
Katilim Bankasi public issue Islamic Bank, Emirates NBD, Kuwait Projects, QInvest, Noor
Bank
Total 33,367 100

34 27th July 2016

 DEALOGIC
LEAGUE TABLES

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months

Manager US$ (mln) Iss % 17.3

US dollar
1 CIMB Group 5,020 35 15.0
Malaysian ringgit 13.7
2 Maybank 4,231 32 12.7
Saudi riyal 1.0
3 RHB Capital 3,137 30 9.4
4 Standard Chartered Bank 3,099 19 9.3 Omani rial 0.6

5 HSBC 2,995 21 9.0

6 AmInvestment Bank 1,864 18 5.6 Sukuk Volume by Issuer Nation US$ (billion) 12 Months

7 Emirates NBD 1,440 14 4.3 Malaysia 17.2

8 Dubai Islamic Bank 1,195 12 3.6 UAE 4.3

Saudi Arabia 4.2
9 Deutsche Bank 1,170 5 3.5
Indonesia 2.6
10 National Bank of Abu Dhabi 956 8 2.9
Qatar 1.6
11 JPMorgan 843 4 2.5 Turkey 1.3

12 Citigroup 816 4 2.5 Oman 1.1

13 Bank Muscat 649 1 2.0

14 Natixis 551 2 1.7 Global Sukuk Volume by Sector 12 Months

15 Noor Bank 468 7 1.4

16 Kenanga Investment Bank 377 7 1.1 17%
Finance
17 Hong Leong Financial Group 343 3 1.0 6% Government
39%
Transportation
18 National Bank of Kuwait 311 3 0.9 7% Construction/Building
19 First Gulf Bank 300 4 0.9 Utility & Energy
9% Other
20 Barwa Bank 260 3 0.8
22%
21 DBS 253 3 0.8
22 Abu Dhabi Islamic Bank 243 3 0.7
Global Sukuk Volume - US$ Analysis
23 Sharjah Islamic Bank 226 3 0.7
24 Gulf International Bank 214 1 0.6 US$bn US$m
18 600
25 Samba Capital 213 1 0.6 16 Non-US$ US$
500
14
26 QInvest 204 3 0.6 12 400
10
27 Barclays 203 2 0.6 300
8
6 200
28 Arab Banking Corporation 180 3 0.5 4
100
2
29 SG Corporate & Investment Banking 145 2 0.4 0 0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
30 UOB 139 1 0.4
2011 2012 2013 2014 2015 2016
Total 33,367 120 100

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors
Arrangers 12 Months Ranking 12 Months
Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No %
1 China Development Bank 821 2 9.7 1 Allen & Overy 2,447 2 22.9
2 Al Rajhi Capital 663 2 7.8 2 Latham & Watkins 1,532 1 14.4
3 Adnan Sundra & Low 1,361 1 12.7
3 Banque Saudi Fransi 579 4 6.8
3 Zaid Ibrahim & Co 1,361 1 12.7
4 Alinma Bank 550 2 6.5
5 Norton Rose Fulbright 915 1 8.6
5 HSBC 497 3 5.9 6 Cliord Chance 758 1 7.1
5 Samba Capital & Investment 497 3 5.9 6 White & Case 758 1 7.1
Management 8 Anjarwalla Collins & Haidermota 172 2 1.6
7 National Commercial Bank 491 3 5.8 8 Haidermota & Co 172 2 1.6
8 Mitsubishi UFJ Financial Group 377 3 4.4 8 Lincolns Law Chamber 172 2 1.6
9 Aga Khan Fund for Economic 354 2 4.2 8 Linklaters 172 2 1.6
Development 8 Mohsin Tayebaly & Co 172 2 1.6
10 NATIXIS 314 2 3.7 8 Pinsent Masons 172 2 1.6

35 27th July 2016

 DEALOGIC
LEAGUE TABLES

Top Islamic Finance Related Financing Mandated Lead Arrangers

Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months
Mandated Lead Arranger US$ (mln) No %
Credit Date Borrower Nationality US$ (mln)
1 Abu Dhabi Islamic Bank 993 9 6.6
15th Apr 2016 Yanbu Aramco Sinopec Saudi Arabia 4,700
2 Mashreqbank 711 8 4.8
Refining
3 Samba Capital 681 5 4.6
27th Jun 2016 ACWA Power International Saudi Arabia 2,686
4 SABB 640 4 4.3
9th Mar 2016 Dhuruma Electricity Saudi Arabia 1,138
4 Banque Saudi Fransi 640 4 4.3 th
15 Jun 2016 PNB Jersey Malaysia 889
6 Saudi National Commercial Bank 634 4 4.2 st
21 Dec 2015 Engro Powergen Pakistan 851
7 China Development Bank 621 1 4.2
28th Jul 2015 GEMS Education UAE 817
8 Noor Bank 600 8 4.0
th
16 Aug 2015 ACWA Power International Saudi Arabia 769
9 Emirates NBD 517 7 3.5
11th Dec 2015 Cititower Malaysia 751
10 Dubai Islamic Bank 474 8 3.2
th
29 Nov 2015 Gulf Marine Services UAE 620
11 First Gulf Bank 472 7 3.2
1st Mar 2016 National Oil & Gas Bahrain 570
12 Abu Dhabi Commercial Bank 437 6 2.9
Authority
13 Standard Chartered Bank 385 4 2.6
14 Al Rajhi Capital 366 2 2.5 Top Islamic Finance Related Financing by Country 12 Months
15 Maybank 338 1 2.3 Nationality US$ (mln) No %
15 CIMB Group 338 1 2.3 1 Saudi Arabia 4,515 4 30.2
17 Al Hilal Bank 307 3 2.1 2 UAE 4,292 15 28.7
18 HSBC 302 4 2.0 3 Pakistan 1,613 3 10.8

19 AKFED 292 2 2.0 4 Malaysia 959 2 6.4

5 Qatar 700 2 4.7
20 Bank Albilad 292 2 2.0
6 Turkey 645 3 4.3
21 Alinma Bank 260 2 1.7
7 Bahrain 570 1 3.8
22 National Bank of Abu Dhabi 251 3 1.7
8 Jordan 550 2 3.7
23 Kuwait Finance House 248 3 1.7
9 Egypt 475 3 3.2
24 Arab Banking Corporation 238 4 1.6
10 India 368 1 2.5
25 Natixis 234 3 1.6
26 Riyad Bank 229 1 1.5 Top Islamic Finance Related Financing by Sector 12 Months
27 Arab National Bank 201 2 1.3
Utility & Energy
28 European Bank for Reconstruction & 170 1 1.1
Development Oil & Gas
29 Gulf International Bank 165 2 1.1
Finance
29 Ahli United Bank 165 2 1.1
Real Estate/Property
Top Islamic Finance Related Financing Mandated Lead Arrangers Transportation
12 Months
US$ bln 0 1 2 3 4 5 6 7 8
Bookrunner US$ (mln) No %
1 Mashreqbank 1,550 4 20.2
Global Islamic Financing - Years to Maturity (YTD Comparison)
2 Abu Dhabi Islamic Bank 1,328 5 17.3
3 Noor Bank 586 4 7.6 2015
2014
4 Maybank 338 1 4.4
2013
4 CIMB Group 338 1 4.4 2012
6 Abu Dhabi Commercial Bank 327 1 4.3 2011
2010
7 Arab Banking Corporation 277 4 3.6
2009
8 Saudi National Commercial Bank 267 1 3.5 2008
8 SABB 267 1 3.5 0% 20% 40% 60% 80% 100%
0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs
8 Samba Capital 267 1 3.5

Are your deals listed here?

If you feel that the information within these tables is inaccurate, you may contact
the following directly: Shireen Farhana (Media Relations)
Email: shireen.farhana@dealogic.com Tel: +852 2804 1223

36 27th July 2016

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