James Caan on the rise of Islamic finance

James Caan made his millions in the recruitment and headhunting business and his claim to fame was his starring role as part of a BBC show which strived to find the latest and hottest new business models.

As a result, he is an expert at delivering the perfect pitch and getting his message across. In the Gulf to announce his latest move into the world of Islamic finance, it soon becomes clear Caan knows exactly how to combine his latest business campaign with some headline grabbing soundbites.

“One of the questions we always ask,” he begins, “is if the global economy operated under Sharia-compliant finance would we have had a credit crisis?” Sitting back in the couch he delivers his bid for quote of the week: “I think the answer is no, actually.”

Aside from his obvious business bias, what weight does his claim have? Sharia-compliant banks did indeed fare better than conventional lenders during the downturn, thanks to rules that forbid speculation and insist loans must be backed by collateral.Banks are also deterred from repackaging debts, as financial instruments generally have to be sold for face value. As a result, Caan sees this as a big sector to invest into and one in which he’s sees a lot of potential.

“When you think that a quarter of the world’s population today is Muslim, as a businessman I see this as one of the biggest growth market opportunities that is under-exploited.

“Potentially over the next five or ten years I can see this as being a very attractive position. I think there is an incredible increase in demand for Sharia-compliant opportunities and products,” he believes.

And the figures certainly back up his claims. Islamic finance assets around the world are expected to climb 33 percent from their 2010 levels to $1.1 trillion by the end of 2012, boosted by the aftermath of the Arab Spring uprisings and dissatisfaction with conventional finance in the wake of the global debt crisis, according to a report by consultants Ernst & Young.

Growth in the Middle East and North Africa will be particularly strong, with assets rising to a projected $990bn by 2015 from $416bn in 2010, as new countries open up to Islamic finance, the report predicted.

In a bid to tap into this market, Caan is pitching to Arab investors to persuade them to invest in a £45m ($69m) UK student housing product, offered through the Islamic investment firm 90 North, in which he holds a stake.

The independent advisory firm was co-founded by Philip Churchill, formerly of Kuwait-backed Gatehouse Bank. The company has already placed nearly £1.1bn ($1.7bn) on behalf of Gulf investors in Islamic-compliant real estate assets to date, so it is far from being a new player in the market.

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