Global laws more Islamic finance-friendly, says fund

Global regulations becoming more Islamic finance-friendly is one of the drivers of an expected significant upward trend for sukuk issuance in the near future.

This is one of the conclusions drawn by a Dubai-based investment fund manager that claims to be seeing growing interest from beyond the Gulf Cooperation Council (GCC).

In a statement, Dalma Capital Management Ltd said a growing number of non-regional organisations are turning to Islamic finance — in particular, sukuk instruments.

In the process, the firm said it has seen an almost one-third jump in enquiries regarding Shariah-compliant bond issuances from corporations outside of the GCC.

“We are currently working with clients on a variety of ‘off the beaten path’ projects, including a refinery initiative in the Commonwealth of Independent States region, and a scheme to help develop eco-tourism and sustainable farming in several African nations.

“We are also seeing interest from Malaysia, Indonesia and Pakistan,” said Dalma Capital MD of investment banking Zahid Aslam (picture).

“It is our experience that sukuk-based solutions are establishing themselves as an increasingly attractive alternative for the funding of infrastructure and development projects,” he added.

Dalma Capital is an alternative investment fund accelerator and advisory firm focused on alternative investments and innovative financial products.

The company primarily serves institutions, family offices and corporations — managing their alternative investment products and advising on innovative financial products including sukuk, as well as blockchain-enabled fundraising solutions.

On sukuk issuance, Zahid said the other main drivers included lower oil prices, notable and mounting pressure on global liquidity and the US Federal Reserve’s ongoing plans to slowly raise interest rates which would make borrowing more expensive.

“Global regulation is enhancing and becoming more Islamic finance-friendly.

“Finally, general awareness outside the GCC of the uses and benefits are becoming ever-more understood and valued,” he said.

Malaysia continues to be a leader in the Islamic capital market, with its sukuk and Islamic fund markets among the largest in the world.

As at end-2018, the Islamic capital market was valued at RM1.88 trillion, representing approximately 61% of Malaysia’s overall capital market. — TMR