LONDON (Reuters)
Dutch bank ING's real estate investment unit is preparing its first sharia-compliant product, a UK commercial property fund venture with Amiri Capital, a senior executive at the UK unit said.
Ian Whittock, Chief Investment Officer of ING Real Estate's UK arm, told Reuters the fund is scheduled to be launched early next year as the firm seeks to lay down a marker in the sector.
" The Far and Middle East are going to be exporters of capital for the next 50 years; we want to prove we can do it (Islamic management " Ian Whittock, Chief Investment Officer "The Far and Middle East are going to be exporters of capital for the next 50 years; we want to prove we can do it (Islamic management)," he told Reuters.
The leveraged fund is planned to launch with up to about 200 million pounds ($319.5 million) of financing in place from European and British banks, and will seek to add equity from investors in the Far East and Middle East to match the debt.
Financing has not been arranged as yet, and Whittock would not give details of the banks likely to be involved.
He said the fund would be exposed to UK retail and industrial properties, and to a lesser extent offices in a bid to achieve annual returns of 10 to 12 percent.
ING's Chris Nash is lined up to manage the fund, with Amiri providing branding, marketing and compliance with Islamic law.
Islamic finance bans the charging of interest, and forbids investment in sectors such as alcohol, pornography and arms. It also requires transactions to be underpinned by tangible assets, making property among the most popular investments.
"It is not a high risk fund, we are trying to offer a position, a recovery play on the UK market," Whittock said.
"Banks have indicated a willingness to lend to ING so we are trying to maximise on that and try to take advantage of the arbitrage between relatively low interest rate and still high property yields," he said.
Islamic insurance firms have already expressed interest in the fund, he said. |
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Recovery Fund " We had a lot of interest from European investors in particular, they want some exposure to a market that diversifies their investments in Europe " Whittock ING Real Estate is also mulling the launch of a leveraged UK recovery fund for the mainstream market, also with gearing at 100 percent.
"We had a lot of interest from European investors in particular, they want some exposure to a market that diversifies their investments in Europe.
The UK has a slightly different performance cycle. They also want to take advantage of the fall in the value of the currency," he said.
This fund would be managed by Jamie Mundy and would have a growth bias, targeting returns in the region of 12 percent. It would target the industrial and retail sector but would also include some alternative assets such as hotels or hospitals.
ING will decide whether to launch the fund, which could start with debt at up to 250 million pounds, by the first quarter of next year. |
