New Islamic investment firm launched

Published: October 14, 2009

Fajr Capital, a new Islamic investment firm focusing on financial services and related opportunities in Muslim markets, has opened its doors. The company is based in the Dubai International Financial Centre with offices in Kuala Lumpur and London.

Iqbal Khan, formerly the founding CEO of HSBC Amanah and Fajr Capital’s chief executive, told emeafinance that now is a good time to launch a new Islamic investment firm.

"For a start, we think that this crisis highlights the merits of a financial services proposition that is rooted in ethical principles and promotes a shift from more consumption and debt to more investment and savings. Our shareholders agree with this view," he said.

"Secondly, as a consequence of the crisis there are a lot of very good investment opportunities available."

Fajr Capital's shareholders have made an initial investment of about US$600mn with access to further capital from increased shareholding, co-investment opportunities and the possibility of expanding the shareholder base.

The firm’s shareholders include the sovereign investment bodies Khazanah Nasional Berhad of Malaysia, Brunei Investment Agency and Abu Dhabi Investment Council, and the private Saudi-based firm Masic (a member of the Al Subeaei Group).

The board of directors is chaired by Sheikh Ebrahim Bin Khalifa Al-Khalifa, chairman of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and a long-time patron of the Islamic financial services industry.

Senior executives include international financial services specialists with backgrounds at HSBC, Citigroup, Bank Islam Malaysia and other leading institutions.

Regarding competition in the Islamic services field, Khan says: "We believe we have a highly differentiated business model. That said, we see ourselves competing with other world-class investment firms for potential assets, and see our portfolio companies competing with leading firms in their various sectors and markets."

Khan continues: "Our focus is not just on the GCC but rather on key Muslim markets in Asia, the Middle East and North Africa. We use a dynamic analytical framework to identify and prioritise the most attractive Muslim markets based on size, profitability, growth and risk considerations, as well as Fajr Capital’s growing connectivity in and across these markets."

Meanwhile, the Islamic Development Bank (IDB) is planning to establish a US$1bn investment bank. Plans were discussed at a meeting of prospective investors at the headquarters of the IDB in Jeddah on October 11.

Ahmad Mohamed Ali, president of the IDB, said the initiative was aimed at promoting the growth of the Islamic financial industry, expanding its global reach and improving liquidity management.

He said that the initial contributions to the bank's capital had reached US$250mn and that the bank will also aim at facilitating the establishment of an inter-Islamic banking market in line with shariah principles. Mohamed Ali also said that the new investment bank would finance mega-investment projects in accordance with the principles of shariah and devise Islamic solutions for liquidity management.

Assets of the global Islamic finance industry are estimated to grow to around US$1.6tn and revenues totalling US$120bn by 2012, a report by consultancy Oliver Wyman said.