KUALA LUMPUR: Shariah-compliant investment management firm Japan Islamic Finance said yesterday it will sell about $1 million of yen-denominated Islamic bonds in a novel structure, as it taps a niche but growing market in Japan. The privately owned company plans to issue debt based on cash flow generated from marketing websites this year, its president Serdar Basara said.
“It will be a website securitization,” Basara told Reuters on the sidelines of an Islamic finance forum. “It may be the first in the world.”
He said the company was seeking regulatory approval for the sale which would be done through private placement. Asia’s largest economy, where Muslims make up less than 1 percent of the population, is building its Islamic finance industry as it seeks greater exposure to booming Gulf economies. Several Japanese firms such as consumer credit company Aeon Credit Service Co. Ltd have sold Islamic debt. The Bank of Japan joined the Islamic Financial Services Board, an international standard-setting body, as an observer member last year. In 2006, the country appointed a board to advise on Shariah or Islamic law.
A surge in oil-related earnings, demands for portfolio diversification and a growing market for socially ethical investments are driving the innovation of Islamic finance products worldwide.
From its start at a microfinance institution in Egypt in the early 1960s, the $ Islamic finance industry has developed to include private equity, exchange traded funds and pawnbroking in centers such as Bahrain, Kuala Lumpur, Singapore and London. Basara said Japan Islamic planned to invest $100 million in technology and environment firms over the next two years.
There is a large untapped demand for Islamic finance products in Japan, as high net worth investors seek alternative investments in the aftermath of the subprime crisis, he said.