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.
Note to Editors:
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.
ABOUT SANAD INVESTMENT COMPANY LTD.
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.
