With the global recession laying many countries’ financial systems bare, Islamic Finance is becoming ever more attractive to weakened economiesIslamic Finance experienced exponential growth in the 1980s and is nowadays enjoying another ‘rebirth’ as banks in Western countries begin offering more and more Shariah-compliant financial services.
Shariah-compliant investment banks are in their heyday as well, managing several hundred billion pounds worth of assets around the world. Indeed, over the past decade, Islamic Finance has been growing at twice the rate of conventional financing in the Middle East.
Qatar’s leading investment bank is QInvest, led by chairman H E Sheikh Jassim Bin Hamad Bin Jaber Al Thani. Licensed in April 2007 with a capital of USD1 billion and now paid-up capital of around USD750 million, QInvest’s shareholders include Qatar Islamic Bank (QIB) and other major institutional and prominent high net worth investors from Qatar and the region.
According to the bank’s CEO,Shahzad Shahbaz, Islamic Finance has proved more robust and weathered the recession better than traditional banks because of several fundamentals. “When you finance someone,” he says, “there needs to be a clear purpose and an underlying asset that you are financing. You do not finance for speculative purposes and there are limitations in Islamic Finance particularly around how much leverage you can provide, and what kind of leverage is acceptable for a company to raise in terms of ratios.”
He says that much of the economic crisis is a consequence of speculation, excessive leverage, and “sometimes there was no clear purpose as to what finance was being provided for.”
Ultimately, however, Islamic Finance can still be impacted by normal credit risk.“When you read articles in the press saying Sukuks are now running into problems and what is going to happen because of this or that default – it is normal commercial risk at the end of the day,” claims Mr Shahbaz.
Though only three years old, QInvest has consolidated its position as a strong leader across the region, offering issuer clients and investor clients a very comprehensive and complete range of services along four core business lines: investment management, investment banking, wealth management and brokerage, which is currently being developed.
Recently, the bank has undertaken a growth plan through strategic acquisitions that are helping QInvest to grow in terms of QInvest instills confidence in investors - 27th October 2010 eographical expansion and in areas of expertise.
In May of 2009, QInvest acquired a strategic 47 per cent stake in Panmure Gordon, a 130-year old London-based brokerage firm. This investment will help expand the bank’s footprint both in the UK and in the US through Panmure Gordon’s subsidiary, Think-Equity.
Earlier this year,QInvest acquired 25 per cent in Ambit Group in India, a market the bank’s clients have been itching to enter.
“Inevitably, India and China are on everyone’s radar. To be able to partner and invest in an entity like Ambit gives us very credible expertise on the ground in India to basically help our clients, whether they are interested in direct or portfolio investment,” says Mr Shahbaz.
QInvest’s presence in different countries and sectors, coupled with its expertise in identifying investment opportunities, is ultimately helping Qatar to diversify its own economy. It is also raising confidence among Qatari investors to invest abroad, especially the UK.
The strength and quality of the platform is borne out by the range of deals and transactions that QInvest has executed. These include acting as sole financial advisor on behalf of Qatari Diar to purchase the US Embassy in London; financial advisor on behalf of Qatar Islamic Bank in the development of a multipurpose mega mall that will be developed in partnership with UAE based Al Futaim Group; and lead manager and bookrunner on behalf of (QIB) for a highly successful debut international Sukuk, representing the first international Sukuk transaction from a Qatari financial institution.
Other ventures include the 2009 joint venture with ABN AMRO,previously Fortis Bank Nederland. The first Shariah-compliant shipping fund focused on mezzanine finance, the QInvest-Fortis Bank Nederland Shipping Fund has afforded the Qatari bank a partner with expertise in a new sector as well as a solid platform to give its clients.
On the investment management side, QInvest has acquired a 40.8 per cent stake in Intercat and Butlers,one of the UAE’s leading outsourced hospitality, dry cleaning and laundry services companies. The investment will enable Intercat to continue to grow its business in the UAE and expand into other GCC markets.
Additionally, the firm has developed sophisticated wealth management offerings led by a talented team of experts supported by a cutting edge technology.
QInvest has an enduring commitment to supporting the communities in which it operates. The firm has developed a programme of corporate social responsibility activities including funding a range of charitable, educational, social, cultural and sporting organisations and events.
In addition, the company sponsors conferences, seminars and other initiatives which support the growth of Shariah-compliant financial services locally and across the region, and further enhance the status of the State of Qatar.