Algebra Capital and Elaf Bank Launch 'The Sukuk Fund'

Dubai, UAE - 7th of September 2008. Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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and Elaf Bank have announced the launch of The Sukuk Fund today (the "Fund"). Targeting an initial size of USD 100 million and returns above 8%, the open ended fund seeded by Elaf Bank and managed by Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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will provide exposure to Shari'a compliant securities issued in the MENASIA region. Elaf Bank will also serve in an advisory capacity on the Fund's Investment Committee.


"We are very happy to be launching and managing The Sukuk Fund, and on working with Elaf Bank. This will be the second fund managed by Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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in its fixed income line of business," commented Ziad Makkawi, Founder & CEO of Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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. "The Sukuk Fund reflects both our constructive view of the region's fixed income markets; as well as the importance of the Shari'a compliant space to us."


Dr. Jamil Jaroudi, CEO of Elaf Bank, added that "The Sukuk Fund is an attractive vehicle to gain exposure to and benefit from the rapidly evolving and attractive Sukuk asset class capitalizing on Elaf Bank's access to and expertise in Islamic finance and benefiting from Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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's investment process and extensive MENA research capability".


"The global Sukuk market now exceeds USD $100bn and the MENA region's contribution to it is expected to continue," commented Mohieddine Kronfol, Managing Director, Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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and the Portfolio Manager for the fund. "MENA Sukuk now represents 33% of the global Sukuk market and a little more than 33% of MENA corporate fixed income issues. Strong economic fundamentals, large infrastructure projects and increasing capital market activity support and advance prospects for the Sukuk market in our region".


"By launching The Sukuk Fund, we hope that it will be considered by investors as a unique financial product providing diversification for their portfolios through the addition of Shari'a compliant income generating issues such as Sukuk." said Ahmad Tayara, General Manager for Investment Banking at Elaf Bank.


-Ends-


About Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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:
Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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operates out of the DIFC and is regulated as a financial services provider by the DFSA. A leading emerging markets asset management firm specializing in the Middle East/North Africa (MENA) region, Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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manages assets in private and public markets across all asset classes. Services are packaged as fund solutions, discretionary mandates or structured products. Clients are a mix of institutional investors and high net worth individuals. Particular attention and resources will be dedicated to attracting international capital flows to our target markets, the MENA and emerging Asia regions (MENASIA). Algebra CapitalAlgebra CapitalAlgebra Capital Limited
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claims the longest combined track record in the Middle East.


About Elaf Bank:
Elaf Bank is a Bahrain-based, Islamic Bank regulated by the Central Bank of Bahrain and operating with an investment banking license ("Elaf" or the "Bank"). Elaf was established in June 2007 with a paid-in capital of USD 200 and an authorized capital of USD 500 million.


Elaf offers a range of investment banking services to corporate clients, institutional investors, and high net worth individuals encompassing advisory services focused on the debt & equity capital markets, as well as asset management services. The Bank's primary focus is to originate, structure, and offer financial products that will strengthen the current state of the primary and secondary market for Sukuk. Furthermore, Elaf intends to carve itself a niche by actively participating in the equity and Islamic financing capital market as a market maker for Sukuk in the primary and secondary capital markets.

Emirates Islamic Bank expands its network with aswaaq

Dubai, September 6th , 2008: aswaaqaswaaq, a public joint stock company under formation, has recently signed a contract to lease to the Emirates Islamic Bank (EIB)Emirates Islamic Bank (EIB)Emirates Islamic Bank
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an area of its second community centre in Al-Mizhar, scheduled to be opened in the last quarter of this year.


AswaaqAswaaq CEO, Abdul Baset Al-Janahi, signed the contract for his side, while EIBEIB's Retail Banking General Manager, Mr. Faisal Aqil, also signed for his outfit in a short ceremony attended by officials from both sides.


In a statement after the signing of the contract agreement, Al Janahi said: "The leasing of this area to a leading player such as Emirates Islamic Bank is a good achievement for AswaaqAswaaq which aims at providing the best services to its customers and shoppers by ensuring the availability of all their day to day needs in AswaaqAswaaq community centers."


He added that AswaaqAswaaq had started leasing its community centers since last February and had received a large volume of applications from various interested companies.


He noted that diversification and precision are the basic features of his outfit's policy in deciding which company should be leased space in AswaaqAswaaq centers although advantage is given to members of the Mohammed bin Rashid Establishment for Young Business Leaders and UAE nationals living in the areas where the center is located.


EIBEIB Retail Banking General Manager, Faisal Aqil, expressed happiness for his outfit's success in signing a leasing contract with AswaaqAswaaq. "With this step, Emirates Islamic Bank has added a new branch to its numerous branches in all emirates of the UAE to meet the demands of the bank's customers," he added.


He pointed out that the new bank in AswaaqAswaaq community center in Al-Miz'har basically aims at serving the residents of the area and shoppers in the centre. "By opening this branch we ensure being closer to our customers," he said, adding that the new branch, which will provide various banking services, will have ATM for cash deposit and withdrawal to allow shoppers at the centre to enjoy easy day to day banking services at all time.

Banking

Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba (usury). Amongst the common Islamic concepts used in Islamic banking are profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real-estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid):There are several other approaches used in business deals. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.

And finally, Islamic banking is restricted to Islamically acceptable deals, which exclude those involving alcohol, pork, gambling, etc. Thus ethical investing is the only acceptable form of investment, and moral purchasing is encouraged. Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio. However, in practice, this is not always the case.

Islamic banks have grown recently in the Muslim world but are a very small share of the global banking system. Micro-lending institutions founded by Muslims, notably Grameen Bank, use conventional lending practices and are popular in some Muslim nations, especially Bangladesh, but some do not consider them true Islamic banking. However, Muhammad Yunus, the founder of Grameen Bank and microfinance banking, and other supporters of microfinance, argue that the lack of collateral or excessive interest in micro-lending is consistent with the Islamic prohibition of usury (riba):

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Sumber : Islamic Banking

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Sumber :
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