New Islamic bank plans $9bn Bahrain Listing

A group of Gulf banks and investors plan to raise $9 billion by selling shares in a planned Islamic investment bank. The bank will tap the rising liquidity in Muslim nations, a senior banker said.

The bank, tentatively named Ummar Bank, will have a paid-up capital of $11 billion, of which $2 billion will be raised in private equity placement, Sheikh Saleh Kamel told Reuters in an interview. Billionaire Kamel, the largest shareholder in Albaraka Banking Group, chairs the General Council of Islamic Banks and Financial Institutions, which is leading the project.

He declined to say when the IPO, the largest in the region, would take place, only that the stocks would first be floated on the Bahrain stock exchange. Albaraka's chief executive officer Adnan Yousif said in February that the bank plans to start operations in 2009.

"We will raise $2 billion in private equity … and the remainder of the normal shares will be raised in public offerings," Kamel said on the sidelines of an annual Islamic Development Bank governors' meeting in Jeddah.

"We started collecting funds for the private equity in May and we hope to complete this in June. We have raised (about) $500 million," Kamel said.

Among firms that have so far contributed are Albaraka and Kuwait Real Estate Bank. "Dubai Islamic Bank and Kuwait Finance House are studying the project … IDB (Islamic Development Bank) have studied the idea and we are awaiting its board to make a decision," Kamel said.

The bank will aim mainly at creating a market for Islamic financial paper and develop new instruments, Kamel said.

"This will be a unique and global player. It will help Islamic banks raise liquidity by providing easy to trade and wholly sharia-compliant instruments."

A feasibility study for the bank was conducted by Ernst and Young, which said in February that the value of assets under management in Islamic institutions has been growing at over 20 percent a year and reached $900 billion in 2007 and is set to hit $2 trillion by 2010.

"The investment funds that (Ummar Bank) will launch will be worth ten times the capital … we will issue asset-backed sukuk (Islamic bonds) worth up to $100 billion," Kamel said.

"This is not a lot when you know that Islamic banks have more than $200 billion invested in global commodities markets which is not benefiting anyone," Kamel added. -Reuters

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Bahrain GCCs leading Financial Hub

Bahrain, with a visionary approach and the best regulatory regime for the banking and finance sector, has emerged as the leading financial centre in the Middle East. Which is getting a competition from Dubai, U.A.E.

The completion of an iconic $1.4b Bahrain Financial Harbour (BFH) and other multi-billion dollar infrastructure development projects have raised the Kingdom's status as one of the most vibrant and growing economies in the region, a senior Japanese government official yesterday said.

Kazunori Tanaka Senior vice Minister of Finance Japan, who is in Bahrain told a Press conference that Bahrain's expertise in banking and finance has attracted as an investment destination and would help to attract the Japanese companies.

The visiting minister, who was joined by the newly-appointed Japan's ambassador to Bahrain Takeshi Kondo, said: "Bahrain can be used by Japanese companies and investors as a gateway to the region due to the Kingdom's strategic location and close proximity to the region's largest economies like Saudi Arabia, Qatar and the UAE."

Talking about the existing potential between Bahrain and Japan, the minister said: "We see the infrastructure developments in Bahrain as a commitment from the government to maintain Bahrain's status as financial centre. These developments will be proved as a catalyst to attract more foreign investments including Japan.

Japan and Bahrain enjoy cordial ties and ties which go back over the decades and with Japan's keenness to cement the exiting ties with Bahrain the coming days will see many developments."
The minister said that Bahrain's expertise in Islamic banking and finance would help the Japanese institutions how to develop the shari'ah-compliant products and services for the client base.

"The economic and financial reforms initiated by the leadership in Bahrain have helped to make this country as a model democracy and one of the most leading economies. Japanese major banks and financial institutions as well as private sector players have chosen Bahrain as destination of choice. There are many joint ventures and in the most of the cases successful partnership between Japanese-Bahraini investors have paved the way to consolidate the existing two-way business.

Referring to the upcoming Bahrain-Qatar causeway, the minister said that Japan's booming construction and infrastructure development expertise can be of great help for carrying out major projects in Bahrain. "We have huge industrial base and we will continue to explore opportunities in Bahrain in trade, commerce, investment and other vital sectors."

In the backdrop of $110 billion bilateral trade between GCC and Japan in 2006, the minister said that the conclusion of the Japan-GCC free trade agreement would be a crucial for Japan and GCC as a bloc.

The minister, who held talks with Bahrain's Minister of Finance Shaikh Ahmed bin Mohammed Al Khalifa and discussed the developments on the Japan-GCC FTA and bilateral trade issues, said that it would be in the interest of both sides to conclude the agreement without wasting much of time.

He said that in the wake of successful talks on the FTA in Tokyo and Riyadh both sides should negotiate all relevant clauses and seal the agreement.
According to official estimates, the trade between Gulf Cooperation Council (GCC) and Japan increased 33 per cent year-on-year basis rising to staggering $110.45b last year.

Japan's imports from GCC increased at an average rate of 21 per cent per year from 2002 to 2006 and the average growth rate for exports to GCC stood at 13 per cent, which resulted in Japan's widening trade deficit. The rapid increase was primarily owed to Japan's soaring imports from GCC, which hit a record high of 11.1 trillion yen. Japan registered a deficit of nearly 9.3 trillion yen in its trade with GCC in 2006, with its exports to GCC remaining relatively stable.

The minister said that Japan's nuclear power technology could be one of the key areas of co-operation for GCC what we call the new era of green technology. "We have world's top quality expertise and technology in nuclear power generation. The US is one of the main recipients of Japanese expertise in nuclear power generation.

He said: "Japan has huge industrial base and an agreement between the GCC and Japan would help to trigger the activities in trade, investment and commercial sectors."

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Bahrain - Qatar to have High-Speed Train Link

A state-of-the-art high-speed rail-link could soon connect Bahrain to Qatar, taking passengers from Manama to Doha in only 30 minutes.

German firm Transrapid International confirmed that it had been in "close contact with government agencies" in both countries with a view of developing a link, which will transport passengers across the waters of the Gulf at speeds of up to 300mph on one of its famed Maglev trains.

Maglev technology - which involves the suspension of objects by electromagnetic forces - first hit the headlines in 2002 with the opening of the world's first operational high-speed conventional Maglev Railway in Shanghai, and Transrapid now has details of prospective projects for the Gulf region on its website.

Its proposals show two main projects - a 145km rail-link between Manama and Doha, and a further 185km route joining Dubai to Abu Dhabi via Jebel Ali and Abu Dhabi international airports.

"The Transrapid and the possibilities it has to offer would be a fitting choice to establish a modern and attractive infrastructure in this economically attractive region," according to the introduction to the proposed project on the firm's site.

The idea has first discussed back in 2005, when former German chancellor Gerhard Schroeder led a high-profile German delegation to each of the GCC countries to gauge the local appetite for such hi-tech transportation infrastructure.

There has been little news of the project since, but this week a spokesman for Transrapid confirmed to GDN that the firm was still in negotiations with authorities regarding work on Qatar's internal transportation system and the potential link across the water to Bahrain.

"The Transrapid-Maglev is one potential alternative in the discussion and planning procedure including alternative high-speed rail links inside Qatar as well as across the future bridge to Manama in Bahrain," the spokesman said, adding that the adoption of the Maglev would represent a "futuristic transportation solution" for the region.

He was unable to give more detailed answers regarding the cost or a potential completion date, saying the project's planning stage "has not yet concluded".

Preliminary work has begun on the $3 billion, 40km 'friendship causeway' for motor vehicles to travel between Bahrain and Qatar, and the local authorities have tipped the road-link to bring an influx of investment from a neighbouring Gulf state in the midst of its own economic boom.

The addition of a Maglev link to the causeway - which will make landfall in Bahrain at the small fishing village of Askar and is still officially scheduled to be completed in 2010 - could give Bahrainis the chance to earn higher wages by working in Qatar and yet avoid that country's notoriously expensive real estate by still residing in their homeland.

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Shamil Bank Bahrain's capital-protected Mo

Bahrain-based Shamil Bank has launched the 100 per cent capital-protected Shamil Navigator Modaraba. Moradaba or Navigator is an innovative, Sharia'a compliant investment product that gives investors an exposure to the best returns achieved on a basket of global equities and commodities.

The subscription is open for one month only starting on May 28, 2007 and closing on June 28, 2007. As a sign of confidence in the product, Shamil Bank will co-invest, from its own funds, an additional 10 per cent of the total capital raised in the Class A investment pool at the close of the subscription period.

The Navigator is a 3-year structured product with 100 per cent capital protection which provides exposure to two profiles of diversified assets comprising global Islamic equities, as well as commodities. The product differs from other capital protected investments currently in the market through its ability to "Navigate" between the better of the two performing profiles at maturity (equity overweight or commodity overweight) to provide for a participation in the best performing profile.

Commenting on the product, Ahmad Tayara, head of investment banking at Shamil Bank said: "By offering capital protection at maturity, the product is ideally suited for those investors who would want to take a balanced exposure to global equities and commodities, without risking their invested capital".

Tayara said: "To ensure that investors get the best returns from both global Islamic equities and commodities, the Navigator takes an exposure on two profiles, an equity overweight profile (75 per cent equity, 25 per cent commodities) and a commodity overweight profile (75 per cent commodity, 25 per cent equity). The basket of equities consists of an equally weighted exposure to 18 Islamic stocks selected from the Dow Jones Islamic Index while the basket of commodities consists of an equally weighted exposure to 4 commodities (excluding gold) and 4 indices. At maturity, the Navigator would measure the performance of both profiles. Investors would first receive their invested capital, and then the best performance among the two profiles, multiplied by a predefined participation rate (70 per cent for Class A and 35 per cent for Class B)."

Commenting on the two investment classes, he said: "The product offers the flexibility to cater for two classes of investors: Class A Investors receive distributions only at maturity based on 70 per cent of the return of the best performing profile in addition to their invested capital. Class B Investors receive distributions close to 2 per cent and at maturity 35 per cent of the return of the best performing profile in addition to their invested capital."

He said: "Since we are upbeat on the medium term outlook for global equities and commodities, Shamil has decided to co-invest in the product along with our investors, which should give them additional confidence in the expected returns of the product."

Tayara continued: "Due to the diversity of the underlying assets and the equal weight allocated to each one of them, investors gain an automatic hedge against the swings in the global equities and commodities markets while investing a minimum of $10,000 in the Navigator and gaining exposure to global financial markets. Add to that the feature of "capital protection at maturity" and we have a product which would effectively suit the risk appetite of the majority of retail investors".

"Investment Banking has always been keen to structure and offer retail products to complement the range of products and services offered by Shamil's retail banking to their valued customers.

"While retail products do not form the bulk of the Investment Banking product offering, we make it a point to release a few of them in the course of a year to cater for a wider investors' audience and create further visibility to Shamil Bank" Tayara concluded.-(TradeArabia News Service)

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Bahrain Financial Harbour starts Operations

The first phase of the Bahrain Financial Harbour (BFH) was inaugurated today (May 2) by Prime Minister Shaikh Khalifa Bin Salman Al Khalifa. Phase I of the $1.5 billion BFH project is the Financial Centre, the main business district.

The formal opening ceremony was attended by over 350 of the world’s leading banking industry professionals, regulators and senior government officials from Bahrain, in addition to other local, regional and international dignitaries.

The event titled ‘Enterprising Bahrain’ included a high profile conference titled ‘Middle East Financial Services Summit’, held in association with the Financial Times Group, and a specially themed evening event.

The opening was followed by an impressive high-voltage spectacularly choreographed multi-media laser and fireworks show which artistically lit up the entire harbour while bringing the iconic Harbour Towers into the spotlight.

Commenting on the occasion, Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain, said: “The region is witnessing a significant change on all fronts be it political, social and even economic. The financial sector in the region, of which Bahrain is a key driver, has also been undergoing a dramatic transformation, successfully emerging into a global financial centre. However, with the rapid growth being witnessed in the region the time is now ripe for the next big growth thrust in the sector, which currently is to some extent being limited by certain aspects of infrastructure and regulation.

“While, as the Central Bank of Bahrain, we are actively working on the regulation side in the kingdom, it is developments such as the Bahrain Financial Harbour that we believe would play a large role in addressing the issue of meeting the complex and constantly evolving infrastructure needs of the sector,” he added.

Esam Janahi, chairman of BFH, said: “Over the last couple of decades, Bahrain has successfully gained the reputation of being the financial hub of the Middle East, driven by the forward looking and open market policies adopted by the kingdom’s dynamic leadership and government and backed by the world-class regulation through the Central Bank of Bahrain and the Bahrain Economic Development Board.

“Furthermore, where the first half of this decade saw record repatriation to the tune of $1.5 trillion back into the region, the last couple of years has seen the trend being reversed with the emergence of Middle East as one of the leading global exporters of investments and the emergence of Islamic Finance, pioneered by the region, as a significant alternate to conventional banking globally.

“This has laid the ideal platform for the region to emerge as a leading global financial centre and Bahrain with its leadership position in both conventional and Islamic Finance, along with its advanced regulatory framework, strategic position and robust multi-lateral trade agreements including WTO membership and a FTA agreement with the USA is well placed to take significant advantage of this. However, there are some limitations in terms of relatively less developed capital and bond markets and the lack of world-class technologically advanced infrastructure that is to some extent restricting this progress. BFH was conceived with the aim of addressing these concerns, in the process significantly contributing to enhancing Bahrain and the region’s position in the global financial markets.

“As promoters of this landmark development which is the region’s most technologically advanced and first fully-integrated master-planned waterfront financial district, the formal opening of this project by the Prime Minister of Bahrain is a matter of great pride for us. We are confident that this milestone project will not just significantly impact the position and economy of the kingdom but would also create large-scale employment opportunities for the highly educated and trained workforce of Bahrain,” Janahi added.

The $1.5 billion BFH was conceived as an integrated financial city, coming up on the Manama Corniche. Furthermore, spread over 380,000 sq m of prime seafront property, it aims at re-enforcing Bahrain’s position as the financial capital of the Middle East and further enhancing the attractiveness of GCC as a whole for global financial sector players.

Phase I of the project ‘The Financial Centre’, which is also the main business district, includes the Harbour Towers – Bahrain’s tallest towers - and the Harbour Mall. The Harbour Towers will provide prime office and commercial space for the financial services industry while the Harbour Mall will house high quality retail outlets and cafes, other leisure facilities as well as brokerage and trading firms. Additionally, development of Phase II of the project, the $450 million Villamar @ the Harbour, which is also a key residential component, is well underway.

Elaborating on ‘Enterprising Bahrain’, Stephen Rothel, chief executive officer, BFH, said: “I am delighted to say that every act in the official launch ceremony of the BFH has been sourced from within the kingdom. It is an incredible accolade for Bahrain’s performers to be able to put on a show of such quality and diversity – with the added passion in the performances that comes from knowing everyone involved in this historic occasion is representing their country.”

The full schedule of the event also involved a full spectrum of talent and abilities from traditional to contemporary being displayed. In addition to the light and fireworks display and the other acts, one of the most popular performances of the evening was by Bahrain’s Olympic gymnasts who are amongst the most accomplished sporting groups in the kingdom.

The opening address at the Middle East Financial Services Summit was delivered by Stephen Timewell, the editor-in-chief of The Banker. The welcome speech was delivered by Esam Janahi, while Brian Caplen, the editor of The Banker introduced the keynote speaker Niall Booker, the chief executive and deputy chairman of HSBC Middle East.- (TradeArabia News Service )

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Instrata Capital Bahrain gets Licence

Instrata Capital has been granted an investment firm licence from the Central Bank of Bahrain (CBB). Instrata Capital will identify, structure and manage investment products that are unique within the region. Instrata Capital is a newly formed Bahrain-based investment management company.

While maintaining a broad view of investment opportunities in the GCC and Mena, Instrata Capital will focus initially on private equity investment in sectors including utilities, transportation, and social and industrial infrastructure, the company said in a statement.

Within the first three years of operation, Instrata Capital expects to have approximately $1 billion of funds under management invested in a portfolio of regional companies and projects.

The region's infrastructure sector is among the fastest growing, with the GCC countries alone projected to spend over $545 billion on infrastructure development over the next 10 years, said the company.

Such rapid development is being facilitated by high fiscal surpluses, the corporate investment required for the expansion of many industrial and processing companies as well as the need for governments to meet the demands of the region's fast growing population for access to a broad range of services.

These factors, coupled with increasing opportunities for private sector participation in infrastructure development, make this a time of unprecedented opportunity for regional and international companies as well as privately managed infrastructure projects in which Instrata Capital intends to invest, it said.

Among Instrata Capital's founding shareholders is Kuwait Investment Company (KIC), the first and largest investment company in Kuwait, majority owned by the Kuwait Investment Authority.

Another firm is Sage Capital Management Group (Sage), a Bahrain-based management and business administration consultancy involved in the oversight of a broad portfolio of investment holdings on behalf of its shareholders in various industries such as financial services, hospitality and hotel management and consumer goods manufacturing among others.

'Today represents a milestone for Instrata Capital as we establish the foundations upon which we can capitalise on investor demands for innovative and alternative investment products within the strong regulatory environment provided by the CBB,' said KIC chairman Bader Nasser Alsubaiee.

'Alongside Sage and other investors, we have created a unique platform through which we can offer new and compelling investment opportunities.

'Instrata Capital will initially provide investors, who do not have access to the specialist skills necessary to evaluate, structure and arrange direct infrastructure investments, with regional infrastructure investment products supported by a highly experienced investment team.

'Infrastructure investment offers strong potential for growth and superior returns as well as effective portfolio diversification.

'We are confident that Instrata Capital is well positioned to maximise the opportunities that exist in the GCC and Mena infrastructure sector and to provide significant value to shareholders, clients and the companies and projects in which it will invest.'

Instrata Capital will work in conjunction with KIC in the development and distribution of its investment offering.

It will soon hold the first meeting of its founding shareholders, at which time it intends to formally appoint a board of directors and senior management team.-(TradeArabia News Service)

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SME Financing Focus by Bahrain

Bahrain’s Industry and Commerce Ministry is organising a conference on “Enhancing SME Access to Finance and Corporate Governance”. The full-day conference will take place on February 25 at the Sheraton Bahrain Hotel – Taj Ballroom.

The event will be held in partnership with the Economic Development Board – Labour Fund, Bahrain Chamber of Commerce and Industry, the Labour Market Regulatory Authority and in alliance with the Commercial Law Development Programme, a programme of the US Department of Commerce Office of the General Counsel and Financial Services Volunteer Corp.

It is being organised under the patronage of Industry and Commerce Minister Dr Hassan Abdulla Fakhro. The conference will commence from 8:30am and continue to 5:30pm and targets small and medium business owners, entrepreneurs, commercial bankers, lawyers who represent small and medium business owners, representatives from non-bank financial institutions, representatives from Bankers’ Society of Bahrain and representatives from Bahrain’s government agencies.

The morning session will be dedicated to introducing best practices of SME financing, highlighting the role of banks in providing financial services including credit to SME’s and outlining the products currently available in Bahrain for SME financing.

The conference will draw on the experiences of both local and international expertise in providing financing solutions to small and medium sized businesses and good corporate governance practices.

The speakers include officials from the Ministry of Industry and Commerce, reputed members of the Bankers Society of Bahrain, representatives from a number of local reputable banks, experts in providing financing solutions from the Commercial Law Development Program of the US Department of Commerce Office of the General Counsel and Financial Services Volunteers Corp.

The evening portion of the conference will introduce the Corporate Governance Code of the Kingdom of Bahrain and focus on the impact on companies of implementing the Code.

Small and medium sized enterprises are the backbone of all economies and are a key source of economic growth. All businesses, small or large, tend to face the same issue in their early days – finding the funds to enable them to start and build up the business.

However in general, small and medium-sized enterprises (SMEs) are at a disadvantage when trying to obtain financing or attract private investors relative to larger and more established firms.

The difficulties that SMEs encounter when trying to access finance may result from an incomplete range of financial products and services, regulatory barriers or gaps in the legal framework or a lack of information on both the banks’ and the SMEs side. The global demand for improved corporate governance could not be greater.

The increasingly complex legal and regulatory environment, high profile corporate scandals, greater participation of foreign investors in developing markets and increased investor awareness of the risk associated with poor corporate governance practices has led to extensive governance reforms in nations throughout the world and greater demand for improved disclosure about how organizations are run.

The global focus on governance has created a need for organisations to assess the effectiveness of their governance structures, programs and processes.

Good corporate governance is vital for Bahrain’s financial and economic development. Global experiences have proven that good corporate governance practices protect investors’ rights, attract investment and enhance the value of companies. The Corporate Governance Code of Bahrain aims at highlighting good governance practices for companies doing business in Bahrain. (via TradeArabia News Service)

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Bahrain issues 236 new industrial licences

Bahrain's industrial sector is booming with a bumper crop of new licences. 'A record 236 initial industrial licences were issued last year, generating a potential windfall of investment and jobs,' Industry and Commerce Minister Dr Hassan Fakhro said in a report submitted to yesterday's Cabinet.

If finalised, they will secure Bahrain investments averaging BD610 million and create 8,323 jobs for Bahrainis, he told the session chaired by Deputy Premier Shaikh Mohammed bin Mubarak Al Khalifa at Gudaibiya Palace.

A first batch of 119 industrial licences has already been approved, securing Bahrain investments worth BD277 million and 5,931 opportunities for Bahraini job-seekers.
While hailing achievements as testimony to its successful policies, the government reiterated its resolve to offer further incentives and woo foreign investors to set up projects in Bahrain.

It also stressed the importance of earmarking more industrial zones and exploring alternative sources to natural gas. The ministerial committee for public facilities has been commissioned to ensure the necessary follow up.-(via TradeArabia News Service)

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