- Many countries are competing to become the capital of Islamic finance, how will this growing competition impact the Islamic finance sector? and where do you see QInvest and Qatar in the competition?
We anticipate that the Islamic Finance sector will continue to grow over the coming years. With Islamic Finance becoming ever more important - on a global level and the Gulf region in particular - we anticipate there will be further innovation in Sharia compliant products and services, as corporates and sovereigns increasingly look for new ways to diversify their funding base.
We envisage that Qatar will remain a key market for regional Islamic Finance and we are committed to supporting its continued growth. We expect that the Qatari Islamic finance sector will continue to mature on the local currency side in the coming 12 to 24 months given the continued issuance by the central bank and the initiatives from the Qatar Exchange to promote a domestic fixed income market.
QInvest is committed to remaining at the forefront of Islamic Finance, as Qatar’s leading investment bank and one of the most prominent Islamic financial institutions in the world.
- QInvest had witnessed a significant increase in Sukuk mandates in October; why is that? And how did you achieve it?
QInvest has cemented its reputation as one of the most prominent Islamic financial institutions in the world. It has been at the forefront of global Sukuk activity in 2014, advising on seven Sukuk transactions thus far in 2014, with a total value of US$3.5 billion, which represents approximately 20% of the international Sukuk market.
The asset class represents an excellent investment vehicle for the Sharia-conscious investor, as well as conventional investors, that are looking for diversification within their portfolio and competitive returns.
The Sharia compliant investor base in the Gulf is largely from the Islamic bank treasury books. We are now seeing increasing participation from the insurance and asset management industries in Sukuk issuances, which is a simple function of the amount of surplus liquidity that Islamic banks currently have and the fact that the only liquid / trade-able instrument they can invest in, is Sukuk.
The non-Sharia compliant regional investor base also has a healthy appetite for Sukuk because they see that the Islamic investors typically anchor Sukuk transactions. This means that, because of the excess demand for Sukuk, should the investor wish to exit a Sukuk position they are able to offer it to conventional as well as Islamic investors increasing the pool of potential buyers.
- Will the drop-in oil prices impact the Sukuk market?
At the moment, I don’t think it is having an impact. Oil exporting countries – including Qatar - have significant financial reserves and very little debt. However, if prices remain low for the long-term, we might see some countries review their funding options and start looking at Sukuk as an alternative option.
- Why does QInvest view the GCC real estate sector as a strategic priority, despite the fact that the sector is known for its volatility and being mostly led by speculation?
Our focus is much more on the commercial side of the real estate market, which is driven much more by fundamentals and not as susceptible to volatility as the residential side of the market.
QInvest has witnessed a marked growth of investor interest in the GCC real estate sector and we see compelling investment opportunities in the sector.
We have advised recently on several notable real estate transactions, including two high profile real estate transactions in Manhattan, New York City: a retail podium in the Golden Triangle of Manhattan and a mixed use development in downtown Manhattan.
QInvest has recently invested in Green House, a residential development in London with a spectacular view overseeing the City’s skyline and adjacent park. Located in upscale St John’s Wood district, 30-grade-A residential unit development comprises multiple amenities, including a Gym, a swimming pool and fitness spa. Scheduled for completion in Q2 2015, the £220 million development has already witnessed a 60% take up.
- How do you plan to increase your investments in the real estate market? And what markets attract you most at the moment?
We have already seen significant increase in activity in the sector. During 2014 so far, QInvest has closed several real estate transactions, with a combined value total of US$1.8 billion, in both the advisory and real estate principal investments area.
We are committed to providing effective financing solutions for real estate transactions in the GCC as well as in gateway markets, such as Continental Europe, London and the US.
- How do you explain your strong relationship with family office, especially the ones which demand completely secure investments, as well as direct supervision over their portfolios?
We have a highly capable Asset Management department who is able to offer world class services and best in class Sharia compliant investments across a range of asset classes to investors. Many family offices and similar investors enjoy having a relationship with us as we are highly responsive and are able to customize portfolios to their needs. The combination of a bespoke service, leading investment advice and management together with direct access to the Asset Management team, is highly appealing to family offices and other institutional clients.
- Islamic banks face lack of Sharia-compliant liquid assets, how do you view the current situation?
In our view, Islamic finance is becoming an increasingly attractive source of funding for issuers around the world, due to its competitive pricing, product innovation and increasing liquidity.
as the universe of Sukuk issuers increases we see that dynamic improving
There are a lot of liquid options for Islamic banks in deposits and Sharia’a compliant equities. The challenge is in Sukuk and investments such as real estate. In the former, supply is still lower than demand, whilst the latter is highly dependent on the asset itself. As the number of Sukuk issuers will increase, this should help to bring more liquidity but a challenge remains in ensuring that there is a liquid secondary market.
- In your interview with the Financial Times, you expected more foreign and GCC companies to issue Sukuk in light of the success of recent foreign sovereigns’ issuances, does this apply to the Qatari market? Do you know of any Qatari companies that will be issuing Sukuk?
We cannot comment on specific companies which might be looking to launch Sukuk issuances however, we can say broadly that we are very confident on the outlook for the Islamic Finance industry – across the GCC and beyond.
Now that more Islamic benchmarks have been established by sovereigns, we expect the next wave of activity to be in the corporate space. QInvest has a strong pipeline of deal flow for the remainder of 2014 and beyond, which will see us continuing to work very closely with corporates, financial institutions and sovereigns.”
- What is your advice to companies that are not keen to enter the Sukuk market?
We would say that Sukuk – and wider Islamic Finance market – is a compelling place to invest, for Sharia and conventional investors alike.
We are increasingly seeing investor interest from non-Muslim issuers in the Sukuk market – and across the Islamic Finance industry -as it offers Sharia-conscious investors a broader range of new investment opportunities.
Furthermore, banks will increasingly look to bonds and Sukuk as a result of the introduction of Bassel III which will encourage institutions to invest in liquid, listed and rated instrument for liquid asset purposes.
Sukuk provide clear investor diversification to issuer who can access a deep liquidity pool not previously available
- What role can QInvest play in supporting the Qatari construction and infrastructure sector, which is currently undergoing massive projects as part of Qatar 2022 and in the lead up to Qatar vision 2030?
We can split the infrastructure spending in Qatar into two categories. There is the spending on commercial projects that have an identifiable revenue stream and spending on infrastructure that has a wider national benefit or aim, but does not necessarily have a viable revenue stream. As a Group, we are actively targeting the first category of infrastructure spending, whether in an advisory capacity or to provide funding from the wider QIB Group. The second category of infrastructure spending is generally being funded directly by the government.
- What are the areas that you focus on in your CSR programme?
QInvest has developed a corporate social responsibility program which includes a variety of educational, training & development, social, cultural and sporting activities.
QInvest also sponsors conferences, seminars and other initiatives that support the growth of financial services and further enhances the status of the State of Qatar as a leading financial centre in the Middle East.
QInvest hosted 18 graduates of the Executive Master’s Program in Islamic Finance at Paris Dauphine University, one of the top five European universities for accounting and finance. The graduates were provided with the opportunity to strengthen their relationships with senior professionals at QInvest and listen to presentations regarding legal aspects, governance and legitimacy, as well as capital markets and asset management. The graduates also met with the Bank’s senior management, including QInvest’s QInvest..
QInvest also held two seminars for over 300 students from Qatar University to discuss the dynamics of the finance industry ahead of the students deciding on their College Majors. During the two-day seminars, which were also attended a number of the University faculty, the Bank’s CEO, COO and CFO talked to students about Islamic finance and its importance in the global economy. The students were also addressed by a number of high ranking officials from QInvest, including the Head of Government & Community Relations and Administration Affairs; the Head of Marketing, Corporate Communications & Investor Relations; HR Vice President; and legal Assistant Vice President.
- What’s the size of opportunities that will be provided by QTalent?
QTalent was launched as a part of our commitment to developing qualified talent for the financial services industry in Qatar. It is a comprehensive and exclusive development program targeted at gifted Qatari Nationals and talented graduates from international universities. QTalent is designed to attract talented graduates from reputable universities and companies. It also offers excellent opportunities for undergraduates interested in completing their internship with QInvest.