By John Irish
New fund aimed at investing US $50 billion in available cash from pension and social security funds is set to be unveiled in May.
Bahrain-based Gulf Finance House (GFH) in association with Lebanese actuarial firm i.e. Muhanna & co, is planning to unveil a new Islamic fund focused on investing billions of dollars in available cash from regional pension and social security funds.
The group, which will make Shariah-friendly investments, estimates pension and social insurance funds in the region to be worth around US $250 billion.
“The industry norm is that usually each of these funds are free to invest about 20%, which means that about $50 billion is available for investment,” outlined Esam Janahi, CEO of GFH.
With the fund looking at the GCC, the wider Middle East, North Africa and other Muslim countries, Janahi suggested the new project would create several funds with investments limited to $1 billion for each as a means of diversifying risk.
The life of the fund would be in the range of 8-15 years with annual returns yielding approximately 7%, a figure Janahi claims will be significantly higher than similar conventional funds.
When quizzed for more details on which funds had been approached, both Janahi and Ibrahim Muhanna, managing director of i.e. Muhanna & co, said more information would be given in May when the fund was ready to be unveiled.
However, the choice of an Islamic platform is bound to help raise the fund’s profile.
“The decision to look at an Islamic fund focused on the regional pension and social insurance funds is a timely and strategic initiative,” explained Muhanna.
“Being an Islamic fund, it would be a safe and secure investment avenue for these funds.”
The fund will look to invest in various sectors including power and energy, telecommunications, transportation and real estate.
GFH will advise on financial and investment issues, while Muhanna will take on the risk management consultancy.