UK Islamic bank Gatehouse, a unit of Kuwait's Securities House, is set to close its first real estate deal in the coming months, refinancing a continental European property worth about 100 million euros ($128.5 million).With conventional lenders rationing credit, Islamic finance institutions such as Gatehouse are increasingly competing with them to finance non-Islamic companies and projects.
"We are financing a built property with a very strong tenant in continental Europe. It is a refinance deal connected to a governmental entity," Chief Executive Officer David Testa told Reuters on Wednesday.
He said the bank expected to seal the deal by the end of the second quarter, declining to identify precisely the property or its location.
"The four wholesale Islamic banks in the UK can certainly do club deals in the comfort zone of 20 to 40 million pounds ($29 million to $58 million), so there are opportunities," Testa said.
"As soon as the market starts to come back, things are going to be exciting again," he said.
Gatehouse's competitor, Bank of London and the Middle East, recently announced a financing deal with Ocado, a food delivery company affiliated with UK supermarket chain Waitrose, and told Reuters it was considering similar deals with other Western companies.
Gatehouse, the latest UK-based Islamic bank to be approved by UK market regulator the Financial Services Authority (FSA), will finance the deal through a lease and buy-back bond issuance, known as Ijara sukuk.
The sukuk will be placed in the market through the Channel Island-listed Milestone Capital Platform, which the bank said has the capacity to issue debt to up to $1 billion.
Testa said Gatehouse was also involved in raising $50 million for a commodity deal with a Latin American company, which he declined to name.
Under the intended deal, a syndicate of banks will buy commodities on behalf of the institution and will sell it on to the company on a referred payment basis, what is known in Islamic finance as trade finance murabaha.
The bank's deal pipeline includes defensive sectors such as utilities and some pharmaceutical companies, Testa said. He said Gatehouse will set up in the second quarter a long-only, open-ended fund to invest in those sectors globally.
Gatehouse is a subsidiary of Kuwaiti firm Securities House. (Reuters)
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