IFN weekly market roundup: 4th – 10th August 2018

Date: Aug 2018

Daily Cover

This week, a new Waqf bank for micro businesses was launched in Indonesia, while Iran announced plans to roll out its first fund of funds and the ITFC partnered with a major US firm to introduce an Islamic energy fund. Read more in this week’s IFN weekly market roundup. 

BIMB rolls out ESG Sukuk fund 

In another debut since its Shariah-ESG Equity Fund was launched in partnership with ValueCAP and Arabesque Asset Management last month, BIMB Investment Management has now rolled out the BIMB ESG Sukuk Fund, the world’s first environmental, social and governance multicurrency Sukuk fund that will be invested in both local and global investment grade Islamic papers, employing Arabesque’s S-Ray methodology for ESG screening. The fund’s targeted annual income distribution is 5%. 

ADIB hires banks for Sukuk 

Abu Dhabi Islamic Bank (ADIB) has mandated HSBC and JPMorgan as the coordinators for the sale of a perpetual Tier 1 Sukuk facility amounting to US$750 million, with more banks to be appointed later. Reuters reported citing sources close to the deal that the bank’s board is also proposing to raise capital through a AED1 billion (US$272.21 million) rights issue. 

ADIB‘s UK operation also made news this week as it announced that it financed the acquisition of the Travelodge Hotel at London’s Heathrow Airport by a Saudi client. The deal was worth a total of GBP40.3 million (US$52.38 million), in which ADIB UK provided financing amounting to GBP26 million (US$33.44 million. 

ITFC partners with Federated Investors for an Islamic energy fund 

US-based Federated Investors will team up with the International Islamic Trade Finance Corporation (ITFC) to launch the ITFC Sovereign Energy Fund later this year. The fund will be sponsored and managed by the ITFC, with strategic input from Federated Investors (UK). The Islamic fund will invest primarily in structured trade, export/import finance, supply chain financing and project finance assets of sovereign entities across the energy value chain in OIC member countries. 

ASL to merge with PNC  

Adnan Sundra & Low (ASL), a law firm offering Islamic legal services, told IFN that it will be merging with Putri Norlisa Chair (PNC), a team of 13 lawyers. The merger will be official from the 1st October 2018, and PNC’s corporate and commercial, mergers and acquisitions (M&A), projects and infrastructure and banking and finance practice will be integrated into ASL’s existing banking and finance, capital markets, civil aviation, corporate and M&A, dispute resolution, Islamic finance and real estate practice. The merged entity will operate under the ASL brand. 

Borsa Istanbul launches CTM 

Borsa Istanbul has rolled out the Committed Transactions Market of Sukuk (CTM) and commenced the trading of lease certificates. The CTM is open to all banks in the country and will facilitate Turkish participation banks to better manage their liquidity. 

OJK launches new Waqf bank 

In an ongoing effort to promote its Waqf industry, Otoritas Jasa Keuangan (OJK) of Indonesia has established Bank Wakaf Mikro Usaha Mandiri Sakinah, a Waqf bank for micro businesses in collaboration with Universitas Aisyiyah Yogyakarta. Situated within the university, the bank’s financing scheme is collateral-free financing with a maximum value of IDR3 million (US$207.15) and the profit-sharing margin is equivalent to 3% per year. As of the 30th June 2018, there are 26 Waqf banks for micro businesses in the nation. 

Malaysia considers refinancing for 1MDB debts 

Over in Malaysia, following the 1MDB saga, the Ministry of Finance is looking at refinancing to service the debts of the beleaguered state fund. It is expected that the government can save up to RM1 billion (US$245.31 million) over 20 years, if the interest rates were to be cut by 100-120bps. 

Iran approves statute for fund of funds 

Iran is poised for its first fund of funds as the Securities and Exchange Organization of Iran has ratified the fund of funds statute. The Iran Fara Bourse has applied for the establishment of the nation’s inaugural fund of funds, focusing on venture capital funds. 

OJK publishes regulation for the public offering of Sukuk 

OJK also published a regulation on the public offering of debt securities and/or Sukuk to professional investors, discussing the definition of professional investors and the submission of registration statements, among others. 

Pakistan turns to the IDB and Sukuk, among others, to support deteriorating economy 

Against the backdrop of a looming financial crisis with an expected financing gap of at least US$25 billion during this financial year starting the 1st July and the budget deficit taking up 7% of the GDP during the last financial year, Asad Umar, the finance minister-in-waiting of the incoming government of Pakistan, is looking at international Sukuk and a diaspora bond of some sort to raise funds, Reuters reported. The South Asian nation is also planning to borrow more than US$4 billion from the IDB. 

IRTI partners with AMF 

The Islamic Research and Training Institute (IRTI) and the Arab Monetary Fund (AMF) have begun exploring opportunities for partnerships, which include the development of the AMF-IRTI Sukuk Index, collaboration on the IRTI-Cambridge Workshop on Developing New Islamic Financial Solutions and cooperation to organize an international conference on Islamic banking and finance. 

SECP releases draft rules for Takaful accounting 

The Secu­ri­ties and Exchange Com­mis­sion of Pakistan (SECP) has published the draft General Takaful Accounting Regula­tions, 2018, to obtain public feedback. The draft discusses the accounting and reporting of the General Takaful business of General Takaful operators and window General Takaful operators. 

Khazanah Nasional appoints new managing director 

After weeks of making the headlines over the mass resignation of its board and the subsequent entry of Prime Minister Tun Dr Mahathir Mohamad, among others, to form the new board, Shahril Ridza Ridzuan, CEO of the Employees Provident Fund (EPF), was appointed as the new managing director of Khazanah Nasional, effective the 20th August 2018. The EPF will be led by its deputy CEO of strategy, Tunku Alizakri Alia, also effective the same date.

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