Dubai creates $10bn Islamic investment firm

SHARIA COMPLIANT: Dubai Holding has created a $10 billion Islamic investment firm. (Getty Images)

Dubai Holding, a group of companies owned by the ruler of the wealthy Arab emirate, said on Tuesday it will consolidate two units to create a sharia compliant investment firm, tapping into the fast-growing market.

The company plans to combine Dubai Islamic Investment Group and Dubai Bank in a new entity called Dubai Banking Group, which would invest across the Middle East, Africa and South East Asia.

" [It] will... aggressively target significant direct investments and acquisitions in a wide range of sectors across the world's biggest Islamic markets," Soud Ba'alawy, chairman of Dubai Group, the financial services arm of Dubai Holding which will manage Dubai Banking Group, said in a statement.

A nearly six-fold rise in oil prices since 2002 has flooded the Gulf with cash that bankers are scrabbling to invest. At the same time, demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has soared.

Islam bans interest, and demands that risk and reward be shared between all participants in a business venture. It also prohibits investments in some business sectors, such as alcohol and pornography.

In January, Dubai's Noor Islamic Bank started operations. The lender is 25% owned by the government of Dubai and 25% by Dubai ruler Mohammed bin Rashid Al-Maktoum, also vice president and prime minister of the UAE.

Dubai Banking Group will be competing with firms including Bahrain-based Islamic investment banks Gulf Finance House and Arcapita.

Gulf Finance House said earlier this week it would build a cement company worth up to $2 billion to take advantage of a construction boom while Arcapita said Tuesday it bought Pinnacle Real Eastate, a European warehouse firm, for an undisclosed sum.

Dubai Banking Group already has investments in Islamic financial institutions in the UAE, Kuwait and Malaysia which combined are worth more than $10 billion.

Dubai is trying to diversify its sources of income away from the energy sector, and has promoted itself as a global financial services hub.

Print | Email | Discuss this article |

USER COMMENTS (0 COMMENTS)

POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Security Code *
Please click post only once - your comment will not be published immediately.