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Islamic Finance
Wahed Inc. on course to secure $50 million Series B financing, preps digital banking platform

Islamic fintech firm is on course to secure financing through a consortium of investors to support its growth, which is expected to take its valuation to around $300 million.

 

London: New-York based Islamic fintech firm Wahed Inc. is on course to close $50 million in Series B financing with a consortium of investors to support its growth as well as the preparation of its digital banking platform in the UK.

 

Wa’ed Ventures, the venture capital arm at Saudi Aramco Entrepreneurship Center (Wa’ed) is leading the round with HSBC acting as the lead financial advisor. Other investors include French footballer Paul Pogba, who recently joined the Islamic economy start-up as a brand ambassador. Strategic family offices and institutions are also participating in this round.

Junaid Wahedna, CEO of Wahed, told Salaam Gateway that the fintech firm will have a valuation of approximately $300 million post financing. He said that this investment round will support the start-up’s current growth phase as well as preparation of its neobank, Niyah, on its platform in the UK later this year.

Launched in 2017, Wahed is considered one of the most successful Islamic economy start-ups. Its product portfolio includes its two ETFs in the US as well as halal workplace and pension portfolios for UK employees. The US-based platform has a presence in nine jurisdictions including operating licences in the US, UK and Malaysia.

In June 2020, it secured $25 million in a funding round led by the VC arm of Saudi Aramco. Wahed’s other shareholders include Cue Ball Capital, Dubai Cultiv8 and Rasameel. The Islamic fintech said that it has over 300,000 customers globally, as of June 2022.

Industry stakeholders said that Wahed’s financing is a positive sign of investor confidence, particularly in the current economic environment.

Ibrahim Khan, founding partner at IFG, a UK-based Islamic finance platform, said that Wahed’s Series B financing is a great validation for the Islamic fintech ecosystem as a whole.

“With the new cash I am excited to see what they [Wahed] build,” he said. “At this mature stage I would expect them to branch out into other interesting products to supplement their main offering and increase margins."

Wahed’s successful fundraising comes after a difficult start to the year.

In February, the US’ Securities and Exchange Commission (SEC) charged the Islamic investment platform for making misleading statements and breaching its fiduciary duty, and for compliance failures related to its Sharia advisory business from September 2018 through July 2019. Wahed agreed to a cease-and-desist order, paid a $300,000 penalty, and agreed to retain an independent compliance consultant among other undertakings.

Vladimir Malenko, Islamic finance advisor at Bedford Row Capital, said that Wahed’s ability to overcome the bad publicity and raise financing from investors is impressive.

“Some thought that they [Wahed] wouldn’t recover after that story with Sharia compliance,” he said. “It shows that the market has a very short memory, and a financially attractive project will find its investors, despite past transgressions.”

To improve corporate governance, Wahedna said Wahed established a risk and audit department headed by industry veteran Umer Suleman, and recently added Lori Richards, a former SEC director to its board.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
National Zakat Foundation of New Zealand launches to serve growing Muslim population

The move comes nearly a decade after the international organisation established a presence in Australia.

 

The National Zakat Foundation (NZF) has officially launched in New Zealand with the organisation anchored on providing an end-to-end service for the country’s growing Muslim community, specifically in respect of Islamic almsgiving, zakat.

Born out of the UK-based organisation, NZF New Zealand had a soft launch at the end of April and officially rolled out at the end of May. The organisation joins other NZF members in Australia, Canada, Switzerland and the Netherlands.

Ishrar Mohammed, CEO NZF New Zealand said the establishment of an NZF in the country was long overdue given NZF Australia was established almost a decade ago.

“Our mandate is the core mandate of all NZF member countries – to strengthen the third pillar of Islam in the local community,” he said.

This would be achieved through five key activities:

  • Raise awareness of zakat;

  • Provide education services focused on zakat;

  • Provide a comprehensive, localised zakat calculation service;

  • Provide a modern, efficient zakat collection service using the latest fintech solutions and

  • Distribute zakat locally with efficiency, transparency and dignity.

Mohammed said NZF New Zealand was live and accepting zakat payments and adaqah (voluntary act of charity) donations, as well as receiving zakat assistance applications.

“For zakat awareness and education, we are launching a social media campaign targeting both zakat payers and zakat receivers. We will also launch the ‘Are you in need or know someone in need?’ poster campaign; a highly successful campaign during the launches of NZF UK and NZF Australia,” he said.

The organisation is currently recruiting staff, both paid and volunteers, who will be trained in zakat calculation and assessment. In terms of providing a comprehensive localised zakat service, NZF New Zealand will collaborate with other NZF entities.

“We are working with colleagues at NZF Australia and NZF Worldwide to initially implement systems and processes developed over 10 years and tested in Europe, North America and Australia and then localising these to suit the New Zealand context,” said Mohammed, adding that localisation was a key goal for the first year.

Addressing Muslim needs

Muslims account for around 1% of New Zealand’s 5 million-strong population, with that figure expected to reach 3% by 2050, according to Pew Research. The growth will be driven by immigration, a young median age and higher fertility rate.

“Our demographics and community challenges are similar to our bigger neighbour, but on about one-tenth scale. We have an even mix of potential zakat payers and zakat receivers,” he said.

However, with an increase in asylum seeker and refugee intake, as well as a rising number of indigenous Muslims, pressure from zakat receivers will increase. Mohammed said zakat receivers were often overlooked in Organisation for Economic Co-operation and Development (OECD) countries.

As well as a spiritual obligation, it is important for zakat payers to have the right methodology of calculating and paying the correct amount.

“For the modern zakat payer, especially with those in OECD countries with the complex financial instruments and assets they may hold, they are often overlooked or incorrectly accounted for during zakat calculations,” he said.

Equally, it was vital to acknowledge the emerging needs of the zakat receiver.

“(The receiver) is completely overlooked in countries like Australia and New Zealand to the point that many in the community don’t think this person exists here,” he said, indicating the number of people relying on food banks and charity shops was increasing daily.

The Muslim community was not immune with Muslims disproportionately over-represented in those categorised as living in poverty.

In addition to mosques, NZF New Zealand will join local and national organisations like New Zealand Zakat Foundation, Kiwi Muslim Directory, Al-Ameen Islamic Development New Zealand and Al Manar Charitable Trust that collect and distribute zakat within the Muslim community.

Challenges

NZF New Zealand’s biggest challenge will be convincing the country’s Muslim community that a local zakat receiver exists, according to Mohammed.

“We are encouraged by Australia, UK, Canada, Netherlands and Switzerland where they faced (and overcome) similar challenges … There the debate is no longer about local zakat receiver, but rather what percentage of zakat should be spent locally versus abroad,” he said.

NZF New Zealand would work with Muslim and non-Muslim organisations to fulfil its activities.

“Capacity building in our community cannot be achieved by any one single organisation. We absolutely believe in cooperating with both Muslim and non-Muslim organisations across New Zealand,” Mohammed concluded.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Newswrap: Islamic finance

Bangladesh’s Deshbandhu Group to issue $250 million sukuk; Sydney-based Ijarah Finance launches financing for construction sector; Football star Paul Pogba becomes Wahed brand ambassador; Abu Dhabi Islamic Bank launches ‘open banking revolution’; UAE’s ADEX signs export financing agreement with Capital Bank of Jordan.

 

Bangladesh’s Deshbandhu Group to issue $250 million sukuk

The Deshbandhu Group is to issue a $250 million sukuk in July through the Al Waseelah Sukuk issuance platform, reported Islamic Sustainable. The high-yield sukuk is to have a 9% semi-annual profit rate over six years, and is to be issued in US dollars and Malaysian Ringgit. The Bangladesh based Group is involved in 16 companies, including food, beverages, fibers, textiles, trading, power and properties. The website noted that the sukuk issuance is intended to bolster foreign exports, domestic market share and invest in new technologies and people. The sukuk is not to feature ESG performance indicators but is intended to focus on United Nations Sustainable Development Goals (SDGs), notably no poverty (SDG 1), gender equality (SDG 5) and decent work and economic growth (SDG 8).

Sydney-based Ijarah Finance launches financing for construction sector

Islamic finance firm Ijarah Finance has developed a Sharia-compliant product for builders and property developers, reported Australian Broker. The product “gives leverage and capability to help builders take on construction projects of up to 5 million Australian dollars ($3.4 million) using a non-interest finance approach known as “Ijarah”, a term in the Arabic language meaning “lease”. Ijarah Finance’s approach adopts the principle of rent to own or “Ijarah Muntahia Bi Tamleek”, which is known as “rent ending with ownership” in Sharia financing,” the website reported. “Our office has been based in south-west Sydney since 2003, so we have many builders and developers of the Muslim faith seeking finance to build commercial developments without undertaking a conventional interest-based loan arrangement,” said Ijarah Finance director Walid (Wally) Ayad to Australian Broker.

Football star Paul Pogba becomes Wahed brand ambassador

French football star Paul Pogba has become an investor and brand ambassador for Islamic fintech company Wahed, reported AhlulBayt News Agency. Pogba joins brand ambassador Khabib Nurmagomedov, a UFC champion. The agency noted that Pogba and Wahed’s CEO Junaid Wahedna “met in September 2021 and found common ground in Wahed’s mission to make ethical investing as accessible and affordable as possible”. Pogba said: “I knew I wanted to be part of it, because growing up, we didn’t have access to a safe way to manage and grow our money.”
Wahedna said “Pogba is a high-performing leader in his industry, which fits with the vision and mission of what we’re trying to achieve,” adding: “We are very excited to welcome him as our new brand ambassador as we continue to reimagine a fairer financial ecosystem.”

Abu Dhabi Islamic Bank launches ‘open banking revolution’

Abu Dhabi Islamic Bank (ADIB) launched its first Application Programming Interface (API) developer portal, allowing fintech developers to use ADIB APIs for the purpose of developing their own applications, according to a press release. The new ADIB API Developer portal will drive Open Banking in the market, allowing fintech developers to build new products that interact seamlessly with ADIB’s platforms. This means that ADIB customers will be able to connect to secure apps and services to their banking easily, including the ability to see accounts held with other providers through their ADIB mobile app. ADIB's Open Banking API platform follows UK Open Banking standards. It aims to provide a range of data to access, use and share by Third-Party Providers (TPPs) such as payment initiators, account aggregators, and other fintechs to deliver new digital services to meet customer and market expectations. Open Banking also offers customers more control over their financial data. The portal complies with the highest international standards on data privacy, ensuring the security of customers’ personal data.

ADIB API developer platform comes as part of ADIB’s vision to become the world’s most innovative Islamic bank. It fully embraces the opportunities of Open Banking which has the potential to revolutionise the industry and the way that people manage their money and do their banking. ADIB API portal will make it really simple for developers to build services that work seamlessly with ADIB’s platforms, and to deliver even more exceptional customer experiences.

UAE’s ADEX signs export financing agreement with Capital Bank of Jordan

Abu Dhabi Exports Office (ADEX), the export-financing arm of Abu Dhabi Fund for Development (ADFD), signed a financing agreement with Capital Bank of Jordan for a credit line of approximately AED73.4 million ($20 million) to support collaborative efforts to enhance the UAE’s exports to the region and boost economies of the two countries, according to a press release.

The agreement will allow ADEX to open a credit line with Capital Bank to re-lend to importers on competitive terms to buy Emirati goods and services.

“The agreement will enable us to work towards fulfilling the vision of our leadership to develop Emirati export and accelerate the pace of UAE’s economic diversification. This strategic partnership is in line with the UAE Centennial 2071, which aims to take the UAE economy to new heights and double the country’s gross domestic product. The agreement also contributes to consolidating the country’s position as an epicentre of global trade,” said Mohamed Saif Al Suwaidi, Director General of ADFD.

Islamic Finance
Islamic finance increases its role in non-Muslim majority countries

As Islamic finance grows both in concept and popularity, service providers are broadening their reach into non-Muslim majority markets to compete head-to-head with conventional options.

 

As Islamic finance strengthens and diversifies, service providers are increasingly targeting non-Muslim majority markets and competing directly with conventional services.

Demand in the non-Islamic market has been historically tied to factors spanning real estate investment in the Gulf Cooperation Council (GCC) economies to wealth management among Muslim minority populations in non-Islamic countries. Now impetus is coming from Islamic finance’s closeness to the environmental, social and governance (ESG) criteria used by socially conscious investors.

Illustrating these dynamics, a recent Maybank Islamic Berhad, the Islamic banking arm of Malaysia’s Maybank Group, survey showed Islamic finance professionals believe current 10-15% growth rates could be boosted by the growing focus on ESG and sustainability. Indeed, 58% of respondents believe annual growth rates over the next five years could be higher than 15%.

UK-based Islamic finance bankers told Salaam Gateway the sector took growth in the non-Muslim market very seriously.

“We have two distinct categories of clients: one is GCC investors who see the UK as a safe haven while also having a preference for Islamic finance for faith reasons and the other people in the UK and Europe who want transparent deposit accounts without hidden fees or charges and where the bank’s role is very clear,” said Andrew Ball, CEO of Bank of London and The Middle East (BLME).

Noting the potentially tight relationship between ESG markets and Sharia, he said: “ESG is huge on the regulatory agenda and we are only at the start of a journey. Clients and regulators are (considering the) impact and striving to make more conscious decisions,” he added.

Ball dismissed the widespread notion that Islamic banking necessarily involves higher fees, but acknowledged it had slightly more complex documentation than conventional banking. BLME has an in-house Sharia board that regularly monitors and is engaged in transactions. This means transactions were subject to an additional audit alongside the conventional one.

In Dubai Muneer Khan, Middle East regional head of UK-based law firm Simmons & Simmons, told Salaam Gateway it was no surprise Britain had a more developed Islamic finance industry than France and Germany, despite both having larger Muslim populations.

The UK is home to the major standalone Sharia-compliant bank BLME. UK banks including HSBC Amanah, Lloyds Bank Islamic Bank Account and Standard Chartered Bank also operate major Islamic branches.

Khan noted the UK has the most advanced Islamic finance market in the western hemisphere partially due to its advanced tax system that levelled the playing field for Sharia-compliant products and services.

Specifically, a series of amendments implemented in the 2000s removed additional taxes and stamp duties charged on Sharia-compliant structures due to their often-layered transaction structuring and non-interest charging basis. Khan referred to amendments related to the UK Finance Act 2005 that ensures payments made through Islamic financing arrangements were taxed as though they were interest.

“Whereas the Islamic finance industry has been developing in the UK, it is proportionately much larger in certain majority Muslim countries in the Middle East and southeast Asia. Islamic banks in the region are offering a wider range of products and services (including online services) that are competing head-to-head with their conventional competitors and even taking market share,” Khan said, citing the First Abu Dhabi Bank in the United Arab Emirates (UAE) and Maybank in Malaysia as examples.

Meanwhile, the advance of fintech, including blockchain technology, is expanding Islamic finance’s reach. In February Australian-headquartered halal, decentralised finance platform MRHB DeFi launched Sahal Wallet that the company claims to be the world’s first ethical and halal crypto wallet.

Its $MRHB token is currently listed on both peer-to-peer decentralised crypto exchange marketplaces DEX and CEX and can be traded on PancakeSwap, a leading decentralised exchange on the Binance Smart Chain (BSC) network.

“All other projects in the crypto ecosystem are unable to address the faith-based communities, including in non-Islamic northern Europe and CIS (Commonwealth of Independent States covering former Soviet republics) where many of our 7,000 users are based. By being halal, MRHB is becoming a gateway for the $3 trillion worth of Islamic finance liquidity entering the crypto ecosystem,” MRHB DeFi CEO Naquib Mohammed, told Salaam Gateway.

Reflecting on Islamic finance’s shift toward presenting itself as an ethical and truly inclusive ecosystem, rather than one emphasising faith-related aspects, MRHB’s ecosystem roadmap contains 10 products – of which only two are Muslim market-targeted.

These are Souq NFT, a non-fungible token (NFT) marketplace offering users the chance to trade NFTs on the blockchain-based gaming platform Gachyi Land and Philanthropy Protocols that aids social initiative funding via the quadratic funding model.

“Quadratic funding applies mathematics to ensure the optimal funding – more democratic, more scalable – of community and social, charitable initiatives,” said an MRHB note.

Other products are neutral, marketed as conventional products, such as its artificial intelligence-based (AI) portfolio management for low-risk investing, the Non-Custodial Wallet.

Rakaan Kayali, CEO of US-based Practical Islamic Finance, argued true Islamic finance would offer a distinct utility and not be limited to making Muslims feel pious. His company shares reviews of investment targets ranging from US automaker Tesla to German chemical producer BASF for Sharia compliance and recommends accordingly.

“You will know when this distinct utility is being provided when non-Muslims use the product too,” said Kayali.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Newswrap: Islamic finance

Islamic finance sector slated for 10% growth in 2022-23; Indonesia and Islamic Development Bank ink $150 m loan for highway; Egypt delays sukuk issuance; Mobiquity releases global digital Islamic banking prototype.

 

Islamic finance sector slated for 10% growth in 2022-23

The $2.2 trillion Islamic finance industry is forecast to grow by 10% in 2022-23, following similar growth in total assets in 2021, according to a S&P Global Ratings report.

“This year, we think higher commodities prices will underpin a stronger recovery in many core Islamic finance markets. Moreover, most of these countries are relatively resilient to macroeconomic shocks resulting from the Russia-Ukraine conflict. This will support the industry's prospects for 2022-2023 but global headwinds could change the picture,” said S&P Global Ratings head of Islamic finance Mohamed Damak, in the Khaleej Times.

Driving growth is investors seeking Sharia-compliant investment vehicles this year. Islamic exchange-traded funds (ETFs) are set to boost global Islamic finance assets to $4.94 trillion by 2025.

The report noted that the Islamic finance industry is facing structural obstacles, notably “the complexity inherent to transactions and the correlation of performance with oil prices given concentration in commodities-exporting countries.” The preference of Sharia scholars for sukuk to have a higher proportion of profit and loss sharing is also posing certain legal challenges.

“However, we see opportunities in the alignment of certain Islamic financial products and environmental, social, and governance (ESG) factors and recent strides in digitalisation. We expect to see a higher volume of green and sustainability sukuk (from a low base) as issuers look to broaden the investor base and include funds aligned with sustainability themes. Moreover, digital sukuk could generate significant investor interest in the future once the necessary prerequisites are implemented,” said the report. “Based on these factors, we believe the market will expand about 10% in 2022-23 after 10.2% growth in total assets in 2021 (excluding Iran),” Damak said.

Indonesia and Islamic Development Bank ink $150 m loan for highway

Indonesia and the Islamic Development Bank (IDB) inked a $150 million loan to finance a toll road project on the island of Java, reported Reuters. The $450 million highway is to connect the central Yogyakarta province with the eastern city of Malang. Additional funding is to come from the Asian Development Bank.

 

Read -
10 years on: What’s next for the global Islamic economy?
 
Read - Islamic finance increases its validity within non-Muslim majority countries

 

Egypt delays sukuk issuance

Egypt was to issues its first Islamic sovereign bonds, sukuk, this financial year, to 2023, but has delayed the planned issuance, Finance Minister Mohamed Maait told Ahram Online.

The minister said that the government had not set a value on the issuance, and that the sukuk are not commercial bonds but meant to address Egypt’s budget deficit as well as attract new investors.

“Sukuk issuance needs great efforts as these kind of bonds are an unconventional way to secure finance. It needs capital, investors, capabilities and a suitable infrastructure,” the minister said at the 47th annual meetings of the Islamic Development Bank (IsDB) in Sharm El-Shiekh.

Mobiquity releases global digital Islamic banking prototype

Mobiquity, part of Hexaware, a full-service digital transformation enabler, has launched a global digital Islamic banking MVP (minimum viable product) for the Muslim community, reported FinExtra. The Sharia-compliant demo - front-end solution- enables financial institutions to enhance their offerings and deliver personalised, ethical digital Islamic banking to their customers. Focusing on Murabaha car finance, the application is core banking platform agnostic and can be integrated and extended with any of the bank's systems
Mobiquity recognises the potential to evolve and serve the Islamic finance sector by provisioning for Islamic banking, particularly in the Middle East, Asia, Africa and parts of Europe where there is a strong Islamic community.
“The future of Islamic finance is disrupting traditional models as more people, particularly the younger generation, seek banking solutions that meet religious needs and encourage an ecosystem of fair, ethical and moral responsibility. Mobiquity creates a global digital Islamic banking MVP that prioritises social and ethical consciousness” said Matthew Williamson, VP Global Financial Services, Mobiquity. “Millennials make up a large percentage of Islamic banking customers. The UK has experienced the highest growth in Islamic fintech companies demonstrating the need to optimise this sector to meet customer expectations. To meet customer expectations, Islamic fintechs worldwide need to use technology that enables flexible banking solutions to suit their customers’ lifestyles. Customers increasingly want digital banking that they can trust and that are convenient to use,” he said.

Islamic Finance
10 years on: What’s next for the global Islamic economy?

Dr Sayd Farook is a Board Member and Senior Partner for the global consulting firm Dinar Standard, which also manages Salaam Gateway and publishes the annual publication State of the Global Islamic Economy Report. Dr Farook is also responsible for Group strategy at Crescent Group which comprises Crescent Wealth Super, Crescent Finance, Crescent Institute and Crescent Foundation.

 

I recall the day vividly. It was December 2012 and I had been recently handed the responsibility to look after the Thomson Reuters global Islamic Finance and Capital Markets business stretching across four continents and deliver a profitable proposition for the group.

I had stumbled across a local newspaper article that spurred my excitement – Dubai led by H.H. Sheikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE (United Arab Emirates) and Ruler of Dubai, announced his intention for the country to become the global capital of the Islamic economy.

Based in Dubai at the time with teams in Dubai, Bahrain and Malaysia, we were waiting until the country made a concerted play for Islamic finance, given its natural economic strength to support the concept.

I told our managing director Russell Haworth I would galvanise our brains’ trust and pitch our capabilities to Al Maktoum. Our unique placement in the heart of Islamic finance could transform their positioning in global Islamic finance. Following his green light, I contacted my then thought leader partner in the halal lifestyle space, Rafi-uddin Shikoh at Dinar Standard.

Yet, I still couldn’t get my head around the construct Islamic economy. In context there was no State of the Global Islamic Economy report, no Salaam Gateway and no Global Islamic Economy Summit.

The Islamic economy was a theoretical construct about which Islamic scholars had written in the 1960s, yet no one had specifically defined it with numbers or sectors. The only tangible context was the World Islamic Economic Forum (WIEF) that Malaysia had vigorously administered since Tun Abdulla Badawi’s spirited action to lead the Islamic economy.

As a trail-blazing Emirate, Dubai’s ambitious vision put a fresh twist to the scattered initiatives to provide a unique, modern and transformative sense of vigour. The rest was history.

With the support of Sheikh Al Maktoum’s executive office, we launched various world firsts including the Islamic Economy Award, Global Islamic Economy Summit, Global Islamic Economy Indicator, Salaam Gateway and State of the Global Islamic Economy Report. Together these defined the modern concept of the Islamic economy in the global business vernacular.

We launched an industry defining report; identified trailblazers across multiple sectors and launched detailed indices that enabled countries to benchmark while developing the Islamic economy.

At the end of this year, it will be a decade since that defining moment and what did it achieve? What is in store for the Islamic economy? These were questions raised during the Islamic economy panel discussion organised by Crescent Rating for its Halal in Travel Summit from 1-3 June 2022.

I was joined by Rafi-uddin Shikoh, Managing Director of Dinar Standard, Kerim Ture, CEO of Modanisa, and Sutan Emir Hidayat, Director, National Committee for Islamic Economy (KNEKS) Indonesia.

My perspective was initially sceptical, but the fellow panellists convinced me that the prospects of this global movement were good – actually better than original estimates and bright prospects were developing across the board.

Rafi-uddin Shikoh, who manages the State of the Global Islamic Economy Report and Indicator, stated there was intense energy and follow-on investment to monitor and improve their standing in the Islamic economy. This included Indonesia and Saudi Arabia in addition to Islamic economic heavyweights like Malaysia, Bahrain and the UAE.

Hidayat said President Joko Widodo’s leadership had mobilised Indonesia as he galvanised various key institutions under Vice President Maruf Amin and direct supervision of the Finance Minister Sri Mulya Indrawati. I felt the growing momentum for this space during the State of the Global Islamic Economy Report 2022 launch in Indonesia the week earlier.

Across the Indian Ocean, Rafi-uddin Shikoh noted the significant energy and momentum developing in Saudi Arabia around the Islamic economy issue would potentially play out in the next few years.

Finally, Kerim Ture offered profound reflections after his more than 10 years in this space as a global modest fashion brand. The company ships to 5 million customers in 126 countries nad has 300 million visits to the Modanisa’s platform annually.

He stated by 2030, approximately 900 million Muslims would be middle class and was bullish about the prospects for the halal lifestyle space. He was looking forward to becoming not just a platform for modest fashion, but for the whole halal goods and services spectrum including halal travel.

After this conversation, there is no doubt there is an institutional momentum towards the Islamic economy, led by the Muslim world’s two major economies Saudi Arabia and Indonesia. Yet, there is an often-whispered challenge in the corridors of Islamic economy conferences – the state of venture funding.

This is noticeably lacking, potentially because opportunities in the Muslim lifestyle market were not widely understood before the defining 2013 State of the Global Islamic Economy report was released. Now there are start-ups basing their business models on the Islamic economy and raising multi-million-dollar rounds from various investors including conventional venture capitalists.

These includes Durioo+, the Muslim-based streaming channel that has raised almost $2 million after graduating from Y-Combinator; Wahed Invest that raised multiple rounds to reach a valuation beyond $100 million and Launchgood that has become the global de facto crowdfunding platform for Muslim causes.

Perhaps the watershed moment for the global Islamic economy will be when an actual institutional venture fund is launched that focuses primarily on the Islamic economy sectors. Given what we have witnessed, it is likely to be initially Islamic fintech with its tangible traction across multiple markets and jurisdictions.

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Canada’s Manzil seals $1.91 million seed financing

Sharia-compliant home financing and investments platform eyes products, acquisitions and geographic expansion opportunities.

 

Toronto-based Manzil recently closed a $1.91million of seed financing deal with an investor consortium to support the start-up’s growth and scale and its international expansion goals.

Last month the company acquired Muslim Will, a Canadian digital Islamic wills platform, for an undisclosed all-cash deal in a move that expands its product portfolio and enables Canadian Muslims to create a will in a Sharia-compliant manner.

Manzil announced the two deals in separate press releases.

Calgary-based Think Financial led the equity seed financing with participation from Holt Xchange, Innate Capital Partners, Jasaya Investments, David Beatty and other angel investors based in North America and the Middle East.

Established in 2017 and officially launched three years later, Manzil offers and distributes halal financial solutions in Canada. In May 2019 it raised CAD$1.15 million ($910,000) in pre-seed capital.

The latest seed financing brings the total raised to CAD$3.51 million ($2.77 million).

Mohamad Sawwaf, co-founder and CEO of Manzil, told Salaam Gateway the start-up plans to use the seed financing to bolster the technology team, product development, marketing and licensing.

“Our aim is to be profitable so we do not have to raise (capital), but if we do, it will be on our terms and be transformational for the business. If everything goes according to plan, we can expect to be breakeven and/or profitable within 12 to 18 months,” he said.

As part of its growth and development, Manzil plans to expand its product offering over the next one to two years. The company is working on launching new funds, credit cards, savings and chequing accounts, auto financing and other services to complement its Islamic digital banking services.

However, Sawwaf added there was a lack of Canadian-listed and denominated funds and the company’s focus would bring Accounting and Auditing Organisation for Islamic Financing Institution (AAOIFI)-compliant and income producing funds.

Manzil’s strategy for introducing more listed funds would add to Canada’s small, but growing, Islamic asset management scene. In December Manulife launched the Manulife SP Funds S&P 500 Shariah Industry Exclusions ETF (exchange traded fund) Fund and the Manulife SP Funds Dow Jones Sukuk ETF Fund to its iWatch platform.

Similarly, Toronto-based Wealthsimple launched the country’s first-ever listed halal ETF (Wealthsimple Shariah World Equity Index ETF) earlier in the year.

There is a compelling rationale for increasing the number of halal products and funds in Canada. Muslims account for around 3.2% of Canada’s population, according to a 2017 study by Statistics Canada, and expected to grow to between 5.6% and 7.2% by 2036.

However, despite this projected growth, Canadian Muslims still lack Sharia-compliant car financing, student financing and commercial financing options, according Sawwaf. He argues the biggest challenges for Islamic finance in Canada mainly constitute licensing and regulations.

“The time and money it takes to get the simplest of licenses are extensive and a deterrent,” he said.

Overseas expansion and acquisitions

Sawwaf revealed Manzil has plans to enter new markets over the next two years. The company aims to offer its digital banking platform in the US, UK, United Arab Emirates (UAE) and Saudi Arabia.

He said nobody really had a completely digital Islamic bank that was readily accessible with low cost and great customer service.

Meanwhile, Sawwaf said Islamic inheritance was complicated and the Muslim Will acquisition provided the opportunity to meet clients’ demands for assistance with them.

“It’s a profitable business with a high margin and we bring on more than 3,000 clients to the Manzil platform allowing us to cross-sell both ways.”

He said the company was open to acquiring new businesses and start-ups if they fitted within their strategy.

“We are always on the market to acquire. If there is a business that makes sense to buy and it’s a product on our roadmap, we will always entertain those discussions.”

© SalaamGateway.com 2022. All Rights Reserved

Islamic Finance
Newswrap: Islamic finance

Afghanistan to implement Islamic banking system; 2027 “very ambitious” for Pakistan’s banking sector to go fully Islamic; UAE’s ADIB sees surge in digital banking channels usage; Bahrain's Al Salam Bank launches financial learning academy.

 

Afghanistan to implement Islamic banking system

Da Afghanistan Bank (DAB), the central bank, announced it is planning to implement an Islamic banking system. “The implementation of the Islamic banking system will be a long process and it is being enforced in many foreign countries. It will come into effect gradually in Afghanistan as well," said Sabir Momand, the spokesman of DAB, to TOLO News.

In March, news emerged that DAB had established a committee to review and amend the Central Bank Law and the Banking Law of Afghanistan. A seven-member committee is to amend the legal framework of the central bank with a Sharia-compliant framework and end the conventional banking sector. The country’s conventional banks have Islamic banking windows while the first Islamic bank, the Islamic Bank of Afghanistan, was licenced in 2018. In other news, DAB announced that it has received nearly $900 million in humanitarian aid.

2027 “very ambitious” for Pakistan’s banking sector to go fully Islamic

In late April, Pakistan’s Federal Shariat Court issued a directive that the entire banking sector would convert to Islamic finance and be riba-free by 2027. But at the World Islamic Finance Forum (WIFF) held in Karachi this week, the Federal Minister for Finance and Revenue, Miftah Ismail, said that more time would be needed. “Five years is a very ambitious timeframe and perhaps will require a little longer,” Ismail is quoted as saying in the Express Tribune. Ismail gave the concluding session at the two-day WIFF conference, which was on the ‘Development of Finance Ecosystem for Global Prosperity’.

Under the five year strategic plan of the State Bank of Pakistan (SBP), the central bank, released in April 2021, a target was set for 30% of total bank assets and deposits to be held by the Islamic financial sector by 2025. “I think there is an effort to convert 35% banking to Islamic banking by next year or so,” said Ismail. “We are working in the right direction. Our speed may be much slower than perhaps is warranted but … Pakistan as a country is moving towards a full implementation of Islamic finance banking system and Riba-free (interest free) banking,” the Business Recorder quoted Mitfah.

A May report by Moody’s Investor Service estimated that Islamic banks hold 19% of total banking assets, at PKR 5,577 billion ($31.2 billion). Moody’s expect annual growth of over 25% over the next five years, enabling the sector to take 30% market share.

UAE’s ADIB sees surge in digital banking channels usage

Abu Dhabi Islamic Bank (ADIB) said it has registered a significant increase in its digital banking channels usage during the first quarter of 2022, according to a press release. Some 40% of customers’ personal finance applications are now taking place digitally on its mobile app, up from 30% in Q1 last year. ADIB currently has over 700,000 customers who are digitally active. In order to meet the increasing demand for services and products that are available through its digital channels, ADIB announced the launch of the ‘Express Finance Cashback Campaign’, which provides customers with the ability to retrieve up to 1000 AED ($272) when applying for personal finance using the mobile app. The campaign, which will run till July 5, 2022, includes up to two installment postponements every year with a first installment payment grace period of up to 120 days.

Bahrain's Al Salam Bank launches financial learning academy

Bahrain's Al Salam Bank has announced the launch of an employee training programme, Al Salam Bahrain Financial Learning Academy, reported TradeArabia. The programme is to be in partnership with Sudanese financial institutions, and under the guidance of the Bahrain Institute of Banking and Finance (BIBF). The programme will also include the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

Islamic Finance
Newswrap: Islamic finance

Egypt to host Islamic Development Bank Group annual meeting; Qatar and Kazakhstan strengthen financial ties; UAE’s Arada Developments to have first US dollar sukuk; Affin Bank signs partnership with robo-advisory firm; IsDB awards for Impactful Achievement in Islamic Economics.

 

Egypt to host Islamic Development Bank Group annual meeting

Egypt is to host the Islamic Development Bank Group’s 2022 annual meeting in Sharm El-Sheikh from 1 to 4 June, reported IQNA. The theme for this year is “Beyond Recovery: Resilience and Sustainability”, focusing on rebounding from the pandemic and global socioeconomic instability. Senior country representatives of the 57 member Organisation of Islamic Council (OIC) will attend.

Meetings will include the Board of Governors of the Islamic Development Bank, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the General Assembly of the Islamic Corporation for the Development of the Private Sector (ICD), the Board of Governors of the International Islamic Trade Finance Corporation (ITFC), and the Board of Governors of the Islamic Solidarity Fund for Development (ISFD).

Qatar and Kazakhstan strengthen financial ties

Qatar Financial Centre (QFC) and the Astana International Financial Centre (AIFC) have signed a MoU to develop cooperation and projects to bolster financial activity, reported The Peninsula. The state-backed QFC attracted 282 new firms to its platform in 2021, reaching 1,284 registered firms and surpassing its target of 1,000 companies by 2022, according to the centre’s website. The AIFC is positioning itself to be a major financial hub in Central Asia, leveraging its position at the geographic heart of China’s Belt and Road Initiative.

UAE’s Arada Developments to have first US dollar sukuk

Arada Developments, Sharjah’s largest real estate developer, is to have debut sale of US dollar denominated Islamic bonds, reported Reuters. The developer has hired Dubai Islamic Bank, Emirates NBD Capital and Standard Chartered as joint global coordinator, and Abu Dhabi Commercial Bank, Ajman Bank, Al Rajhi Capital, Kamco Invest, Mashreq, Sharjah Islamic Bank and Warba Bank as joint lead managers and bookrunners. The dollar denominated sale is slated to be the first in the GCC since Sharjah raised $750 million through a sukuk in March.

Affin Bank signs partnership with robo-advisory firm

Malaysia’s Affin Bank has entered into a partnership with GAX MD (MYTHEO), a robo-advisory service provider, reported Fintech News. MYTHEO is an algorithm-based and automated discretionary investment portfolio management service enhanced by Al. The new service, AFFIN AVANCE, will be a financial and wealth segment for the “mass affluent”. “This partnership, which is our first collaboration of its kind with a robo-advisor, offers an alternative investment option to our new and existing AFFIN AVANCE customers, thus further enhancing our line-up of financial solutions and products offering. Malaysia’s mass affluent category is performing exceptionally well, with an upward growth trend. There is an increasing demand for more convenient avenues to invest,” said Datuk Wan Razly Abdullah, President & Group CEO at Affin Bank. Affin Islamic Bank Berhad is a wholly owned subsidiary of Affinbank.

IsDB awards for Impactful Achievement in Islamic Economics

Three professors won the 1443H (2022) Islamic Development Bank (IsDB) Prize for Impactful Achievement in Islamic Economics, reported MENAFN. Professor Habib Ahmed was awarded first prize, Professor Mansur Masih second prize, and Professor Tariqullah Khan third prize for their significant and influential contributions in the field of Islamic economics and finance. The prize aimed “to recognize, reward and encourage significant knowledge contributions in Islamic economics with the potential to solve major development challenges of IsDB member countries. The prize comes with a $50,000 award for the first prize winner, $30,000 for the second prize, and $20,000 for the third prize.”


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