Financial advices for corporations

Australian centre for islamic finance sets up sharia advisory board


The Australian Centre for Islamic Finance has set up an advisory board to help local businesses conduct sharia-compliant transactions, including developing financing options such as Islamic bonds, the centre's director told Reuters. The three-member board is the latest sign the industry is making headway despite Australia's lack of regulation catering to Islamic finance, which follows religious principles such as bans on interest and pure monetary speculation. The centre's sharia board members might not have the global name recognition as some of their Gulf-based peers, but familiarity with Australian law would appeal to local firms, said Almir Colan, director of the centre, an education and training body.

"We need people who will be able to apply classical fiqh (Islamic jurisprudence) principles within a modern context - the increased complexity of financial products and commercial transactions needs specialists."

The scholars have backgrounds in Islamic law and hold Islamic finance degrees from Melbourne's La Trobe University, while the board also aims to guide local Muslims on commercial matters."Their work will not be limited to corporate finance and auditing for sharia compliance but will also serve the wider community in Australia with regards to all issues regarding finance and commercial transactions," Colan said.

Last month, Melbourne-based First Guardian launched an Islamic pension fund in collaboration with local Muslim organisations to tap the country's private pension system, the world's fourth largest. Sydney-based fund manager Crescent Wealth plans to launch an Islamic fund investing in commercial property this year as it continues to expand its range of products.

Bahrains ibdar bank eyes larger deals after three way merger


Dec 2 Bahrain's Ibdar Bank hopes to leverage the combined expertise of its predecessor banks and a larger balance sheet to win business which its three legacy banks struggled to individually, its chief investment officer told Reuters in an interview. Ibdar was launched as a brand on Monday following the merger of Capivest, Elaf Bank and Capital Management House, after more than a year of negotiations between the Bahraini lenders and authorities. Bahrain's banking industry is streamlining, aided by a central bank policy encouraging mergers and acquisitions, after it struggled in the aftermath of the global financial crisis and political unrest which deterred some foreign investment."2013 was a year we focused on integration, where we laid the foundations, 2014 is hopefully a fresh start for us," said chief investment officer Mohamed Aljasim. The Islamic lender now has $300 million of paid up capital, $329 million in equity and assets of $360 million, which it hopes can help it win deals in its focus areas of capital markets, private equity and real estate."There were a lot of opportunities that each of the legacy banks could not do individually, as it was too big or they couldn't close the transactions. We now have a bigger balance sheet, it opens the door to greater opportunities for us."

Ibdar is not leveraged and will retain Elaf Bank's licence in Malaysia to support a geographical scope that includes the Middle East, North Africa and Turkey, Aljasim said. In the past, the three lenders were involved in financing, advisory work and portfolio management in the aviation, shipping, infrastructure and real estate sectors, which Ibdar aims to maintain while disposing of non-core assets. Ibdar would launch new products along these same business lines, said Aljasim, without elaborating on the timing or size of future transactions.

"The business lines will continue, not one will out-shine the other."The merger is a rare example of a successful consolidation of Gulf Arab banks, helping the tiny kingdom's standing as a regional banking sector against growing competition from the likes of Dubai, Abu Dhabi and Doha. Although the commercial rationale for consolidation is largely accepted, Gulf bank mergers are uncommon because main shareholders, often powerful local families, are reluctant to cede control and can demand exaggerated valuations.

"In terms of the process, which started in June 2011, it was shareholder-driven which made it easier to execute. The framework avoided a lot of the issues of valuation and other issues that can come in-between," Aljasim said. The merger comes at a time when several other Bahraini banks are considering mergers of their own. Islamic lender Al Salam Bank said in September it had agreed to merge with fellow Bahraini lender BMI Bank, an affiliate of Oman's Bank Muscat, through a share swap. Khaleeji Commercial Bank, 47 percent owned by Gulf Finance House, said in June it was evaluating a potential merger with local lender Bank Al Khair. In March, National Bank of Bahrain and a local pension fund bought a 51.6-percent stake in Bahrain Islamic Bank from Kuwait's Investment Dar in a deal worth around $92.6 million.

Basis point hk loan market hopes for return of a list credits


Telephone Co Ltd is seeking a HK$6.5bn ($837.19 million) three-year loan, bringing some excitement to a market which has been waiting for "A-list credits" to return. Hong Kong top-tier credits had been shying away from the syndicated loan market, many of them deterred by higher pricing last year amid tightened liquidity and higher funding costs. Some turned to the more attractive bond market, while some chose bilateral loans or small club deals to pay less.

Hutchison Telephone too is seeking a club deal, according to sources. However, given the large loan size, the group of banks for the club is 10-strong. The 10 are Agricultural Bank of China Ltd , Bank of China Ltd , Credit Agricole Corporate and Investment Bank SA, CIBC , DBS Bank, HSBC Holdings Plc , Mizuho Corporate Bank, Standard Chartered Plc , Sumitomo Mitsui Banking Corp and United Overseas Bank Ltd. Sources said gathering 10 banks is "a piece of cake" given this borrower's solid network of relationship banks and the fact that many lenders are hungry for top-tier names.

"Also, given that pricing would be reasonably higher now compared to pre-Lehman days, many would want to book the asset," one source said. Sources said the deal is split into a HK$3.6bn term loan and a HK$2.9bn revolving credit. Lenders to the club get an all-in of 200bp via a margin of 160bp over Hibor and a 120bp fee. The revolver comes with a 40bp commitment fee.

According to Thomson Reuters LPC data, the borrower has an existing HK$5bn three-year loan due this December that paid an all-in of about 120bp. BOC, CA-CIB, DBS, HSBC and SMBC were lenders to that deal from 2009. The last syndicated loan for a Hutchison Whampoa Ltd company was in March 2011 for Hutchison Ports Holdings Trust. HPH Trust got a US$3bn three-year financing that paid an all-in of 150bp via a margin of 120bp over Libor. Meanwhile, Hutchison Telephone's latest loan adds to a growing deal pipeline that could boost Hong Kong loan volume to over US$15bn this quarter. Besides the around HK$6bn Hutchison Telephone refinancing, Hong Kong Exchanges and Clearing Ltd is seeking a US$2bn bridge loan, and Noble Group Ltd's latest refi is expected to increase to at least US$2bn. Volume of more than US$15bn would be four times the first quarter's record low US$3.85bn. Hong Kong in the first quarter witnessed the biggest year-on-year contraction when volume dropped 62% from 1Q11's US$10.2bn.

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