(openPR) - The world’s first GCC oriented Sukuk fund, the Islamic counterpart of the conventional bond fund, was officially launched by the fund’s chairman Sheikh Mohammed H. Abudawood, a respected Saudi-based businessmen during the International Islamic Finance Forum in Zurich, 13-16 November.
Sheikh Mohammed was pleased to explain the fund’s rationale, saying it closed a wide gap in the Islamic financial industry. At the launch he said “Sukuk as replacement of bonds are a very new development. They have never been available to a wide base of Muslim investors. These investors want both a quality investment product and an investment that meets their religious criteria. I am honored to contribute to this development, offer my guidance to it and will be proud to see it progressing and growing. Such a product was needed for long time.”
Mark Mortimore, the Executive Director of the fund’s management company, made the strategy clear to delegates, explaining “the fund is going to invest in not less than 75% in Sukuk and up to 25% of Sharia-compliant syndications in order to enhance the yield. Although we know well that a number of new Sukuk issues are coming up in Asia, our primary focus will be on the GCC. Further we prefer buying Sukuk that follow to Sharia understanding prevalent in the Gulf countries, such as outlined in the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions.”
John A. Sandwick, Managing Director of Encore Management S.A., commented “We assembled a world-class team to complete this fund in record time. Among the experts was Jawad Ali of King & Spalding, perhaps the world’s best Islamic finance legal counsel today. Together we made a world-class investment product suitable for anyone, not just Islamic investors.” Encore Fund Management Co. Ltd., the fund manager, is a wholly owned unit of Encore Management S.A.
An important effect of the fund's launch will be the impact on Sukuk market activity. In all of 2005 there were only about $60 million in GCC-style Sukuk secondary market transactions, a tiny fraction of the estimated $15 billion of Sukuk that were outstanding at the end of last year. With the introduction of the Sanad Sukuk Fund, targeted to quickly reach $100 million or more, secondary market trading should substantially increase. Economists the world over point out that increased market activity of all securities is a core component of economic development, fostering increased issuance of securities and thereby contributing to economic growth.
Sukuk , the plural of the Arabic word Sakk, means "certificate" or sometimes "credit note." It is also the root for the English word "cheque." Sukuk replace interest income with rent or profits; they are therefore the alternative for Muslims seeking a stable income complying with their faith. Sukuk finance real economic activities and, depending on the underlying structure, they are tradable at market value from the Islamic perspective. Secondary market trading is still weak in the GCC region, as Sukuk are relatively new. Significant new Sukuk issuance has only recently increased, while near-term expected new issuance is forecast to increase dramatically. Japan, China and Indonesia are among many market entrants expected to enter the Sukuk market in 2007, while at least 100 or more companies based in the Arab world are believed now to be preparing new Sukuk issues.
Sanad Investment Company Ltd.-or the Sanad Sukuk Fund-is the first GCC-oriented diversified Sukuk fund in the world. It will provide both stable income and liquidity for Muslim investors. It closes the significant market gap for Muslim investors in their asset allocation by finally providing a bond-like investment vehicle that is fully Sharia-compliant. The Sanad Sukuk Fund will invest not less than 75% in Sukuk and a maximum of 25 % in Sharia-compliant credit syndications, with a focus on the GCC countries. Expanding the Sukuk market by creating a Sukuk fund will lead directly to increased economic development in the GCC region. The fund is being domiciled in the Cayman Islands along with the fund manager Encore Fund Management Co. Ltd., a wholly owned subsidiary of Encore Management S.A. in Geneva, Switzerland. The Sanad Sukuk Fund targets institutional and individual investors of all kinds. More information on the Sanad Sukuk fund can be found at the fund's website, www.sanadfund.com.
ABOUT ENCORE MANAGEMENT S.A.
Encore Management S.A. was founded in 1998 to serve private clients in the management of their family long-term savings, whether through portfolio investments, private equity, or real estate. The firm has established deep institutional relationships in Switzerland, in particular working in partnership with UBS S.A., the world's largest asset management bank. Encore's principles are bankers of long standing in the Swiss private banking and asset management businesses. The company remains very active in the Islamic banking space, and has frequently promoted increased transparency and Sharia-compliant securities development through conferences and both print and electronic media. Encore's wholly owned subsidiary-Encore Fund Management Co. Ltd.-was created to manage the new Sanad Sukuk Fund.
ABOUT THE INTERNATIONAL ISLAMIC FINANCE FORUM
The Forum brings together pioneering international and regional policy makers, business leaders and scholars with the latest trends and challenges in what is the world's fastest growing financial sector.
The Forum, organised in association with Dow Jones Indexes, has established itself as the premier business-to-business conference in the field of Islamic finance and is designed for experienced practitioners as well as new entrants to the field.
As the hundreds of participants from around the world attending previous events have already discovered, the Forum also presents an unrivalled networking opportunity. Ministers, Chairmen, CEOs, Managing Directors and senior executives attend.
In total twenty in-depth sessions covering a wide range of topics, including a special 'Leaders In Islamic Finance' session that will examine 'Emerging Markets In The Islamic Finance Arena - with a Spotlight On Europe'. Another highly relevant presentation will be made on 'Meeting The Demands Of High Net Worth Individuals, For Sharia'a Compliant Products In Europe - Exploring Opportunities In The Swiss Private Banking Sector'.
Over 50 expert speakers have been recruited including Global Director, Dow Jones Islamic Indexes, US, Rushdi Siddiqui; managing director, SAM Indexes GmbH, Switzerland, Alex Barkawi; director general Association Suisse des Gérants de Fortune (ASG), Switzerland Maurice Baudet; director Asset Management Division, Global Head -Islamic Investments, Credit Suisse, Switzerland, Fares Ahmed Mourad and Global Markets Equity, Deutsche Bank AG, UAE, Hussein A. Hassan.
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