Al Hilal Bank announced the launch of its first sukuk fund, the Al Hilal Global Sukuk Fund. The new offering reaffirms Al Hilal Bank’s full commitment to product and service innovation and its keen interest in strategic segments of the financial services sector.
The flagship fixed-income fund’s objective is to generate regular income as well as achieve capital appreciation by investing in globally-diversified Shariah-compliant fixed-income securities (sukuk) issued by sovereign, quasi-sovereign and corporate organizations. The structure of the fund is open-ended and the initial offering period will last for one month beginning February 19, 2012. Investors will be able to allot a minimum subscription of $10,000 at an initial NAV of $10 per unit, representing one of the market’s lowest subscription amounts.
Al Hilal Bank will act as the Fund Sponsor while CIMB Principal Islamic Asset Management (CIMB Principal Islamic) will serve as the Investment Advisor for Al Hilal Global Sukuk Fund. CIMB Principal Islamic is a dedicated Islamic global institutional asset management organization with a proven track record of managing fixed-income and equity mandates. As of December 2011, CIMB Principal Islamic had assets under management of $764 million while the combined Islamic assets under management inclusive of its shareholder group amounted to $2.5 billion.
The sukuk fund marks Al Hilal Bank’s second investment fund. The Al Hilal GCC Equity Fund was rolled out in 2010 and currently invests in publicly-traded Shariah-compliant corporate stocks. The latest fund is expected to quickly gain traction given the proven track record of the management and advisory team assembled by Al Hilal Bank, the prevailing volatile global financial environments, and the growing popularity of sukuk securities.
The outlook for the sukuk market is very positive despite the current global macroeconomic uncertainty. Recently-launched sukuk issues were heavily oversubscribed by regional and global investors, reaffirming the appetite for good-quality credit. Furthermore, there is a healthy pipeline of new sukuk as issuers tap debt markets for refinancing needs and take advantage of the current low interest rates.
“We are excited to offer a Shariah-compliant investment opportunity that provides regular income and relatively low-risk exposure. The fund offers an attractive alternative to other investment options with comparable risk profiles. It also raises Al Hilal’s profile as a progressive bank that offers thoughtfully-planned investment solutions,” Mohamed Jamil Berro, CEO, Al Hilal Bank, said.
Explaining the rationale behind a sukuk fund, Lim Say Cheong, Head of Al Hilal’s Investment Banking Group, said that today’s investors prefer low-risk investments with stable returns and regular income.
Al Hilal Bank is owned in full by the Abu Dhabi Investment Council, which is the investment authority of the Government of Abu Dhabi. The bank is working with an authorized capital of AED 4 billion, and is authorized to operate as an Islamic trading bank. Al Hilal Bank aims to become the leading financial institution in the region and to increase the growth of Islamic banking with a new direction, towards new technologies and special services. Al Hilal Bank has 21 branches strategically located across the United Arab Emirates as well as 3 other branches in major cities of Kazakhstan.