BLME Plans Three Islamic Funds This Year

(Dow Jones)
Filed on February 1, 2009

DUBAI - Bank of London and the Middle East, or BLME, plans to launch at least three funds in 2009 targeting fixed income, distressed real-estate assets and equities, a bank executive said on Thursday.

The Shariah-compliant lender, which was launched in July 2007, has completed preparation for a US dollar based fixed income fund, a UK real estate distressed assets fund and an equities fund, Adrian Gayler, the newly appointed head of private banking at BLME, told Zawya Dow Jones in a phone interview.

“It’s all about the timing. We will launch at least one fund in the first quarter this year,” Gayler said.

“Our main targets are high net worth individuals and wealthy families in the Middle East, focusing on the GCC and on Kuwait in particular,” he added.

The lender, which is mainly owned by Kuwaiti investors, completed last March a £75 million ($149 million) private placement to raise its capital to £250 million to meet the growing demand for Islamic finance products in the UK.

Islamic finance is based on the principles underlying Islamic law, where all transactions and agreements must be structured in such a way as to avoid interest, as well as any investments such as alcohol, pork and gambling.

BLME will capitalise on an increasing appetite for Islamic finance, which protects investors from the risk of excess leverage and prevents exposure to toxic assets, short selling as well as derivatives, amid a collapsing global financial system.

Islamic Banking

“We are all concerned about the global economy and the state of the financial system. People have lost faith in a system that they thought is well governed and audited,” Gayler said.

Over the last decade the Islamic banking industry has experienced a period of sustained asset growth at around 10-15 per cent annually, and assets now total in excess of $500 billion.

BLME has completed a £31.5 million finance transaction for Premio Group Holdings to refinance the company’s property portfolio in Mayfair, London.

The lender also completed in June 2008 a $50 million syndicated Ijara leasing facility for Al Ghadeer Marine Shipping LLC, the Dubai-based shipping company, to fund the acquisition of the 53,000 dead weight ton, or DWT, double-skinned bulk carrier, Sara V.

The bank also acted in September 2007 as one of the lead arrangers on and committed $10 million in a $100 million Murabaha financing facility for Turkey’s Turkiye Finans Katilim Bankasi, marking the bank’s first participation in a syndicated Murabaha facility.

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