Sidra Capital, the Shariah-compliant investment firm regulated by the Saudi Arabian Capital Market Authority, announced that Sidra Income Fund II, the US dollar-denominated investment fund focusing on commodity export trades within the Asia-Pacific region, has been awarded the coveted Islamic Finance News Awards for Trade Finance Deal of the Year 2022 and Indonesia Deal of the Year 2022.
The fund capitalizes on export trades of branded solid fuel within the Asia-Pacific region, which accounts for 60 percent of the world’s population, and with global energy consumption set to increase post-pandemic, together with the consequent disruptions in supply, the fund is uniquely placed to take advantage of such events.
Launched in October 2022, SIF II’s investment strategy is premised on an innovative facilitation of commodity supply chain transactions via fully funded irrevocable letters of credits. As the trades are secured end-to-end by USD-denominated LCs and issued by banks with strong credit ratings, investors are protected against foreign exchange and payment risk by trade counterparties. Furthermore, as the trades are structured as back-to-back purchases and sales of commodities (rather than speculative trading), investors are also not exposed to inventory and price risks.
Furthermore, Sidra Capital also sought Shariah-compliant political risk cover against risks of convertibility/transferability, expropriation, and war and civil disturbance.
“Sidra Capital is no stranger to the structured trade finance space, having established award-winning trade finance funds since 2012. The latest IFN awards are a testament to Sidra Capital’s ability to scout for private finance opportunities globally and innovate investment solutions that bridge the gap between capital providers and users while mitigating inherent risks in such structures,” said Hani Baothman, chairman of Sidra Capital.
“Our private finance solutions have a low correlation to other asset classes, generate consistent returns with low volatility, and invest into the real economy with no leverage or speculation, which creates a win-win situation for our investors, trade counterparties and communities that we operate in. This in turn encourages social and economic developments in the markets where we intervene,” Baothman added.
As a pioneer of Islamic private finance in Saudi Arabia, Sidra Capital has a diverse portfolio of Shariah-compliant private finance investment solutions, including the Sidra Mutajara Fund and the award-winning Sidra-Ancile Global Structured Trade Investment Fund.