MANAMA, 4 July 2007 — The Central Bank of Bahrain (CBB), which has recently launched a new regulatory framework to govern the collective investment undertakings (CIU) industry, is seeing early success following the introduction of CIU.
Three “Exempt” CIUs, the first of their kind in Bahrain, have been registered with the CBB within three weeks since the new CIU rules came into effect from June 1, 2007. The new rules provide for the full range of investment funds, from the lower risk funds aimed at retail investors to the higher risk alternative investment vehicles.
At present, Bahrain leads the region as a funds center, with over 2,000 authorized funds, including over 100 locally domiciled funds. The new CIU regulations will further enhance and develop the market, by allowing a much broader range of CIU to be domiciled and offered in Bahrain, all within a credible regulatory framework.
The new “Exempt” CIUs are sponsored by Global Investment House, National Bank of Kuwait (NBK) and Naeem Holding Company for Investments. Global’s Global Real Estate Ijara Fund is a close-ended Islamic real estate fund, NBK’s NBK Institutional Access GCC Equity Fund is a conventional, open-ended private equity fund; while the Naeem MENA Growth Fund is a conventional open-ended fund which will invest in listed equities. “The new registrations are consistent with our expectations with regard to market appetite for investment funds targeting very high net worth individuals or institutional investors,” said Mohammed Ayman Al-Tajer, director Financial Institutions Supervision, at the CBB.
“The new rules differentiate between the various categories of investors and provide appropriate levels of protection or exemptions.”
Highlights of the provisions for various categories of CIUs include: Retail CIU, which may be marketed to anyone, are subject to various requirements aimed at investor protection, such as restrictions on types of assets that may be held in the CIU and various limits on concentration risks; expert CIU, which are subject to a minimum $10,000 investment rule, may only be sold to expert investors with financial assets of $100,000 or more to invest. Expert CIU are also regulated, but may fully invest in a wider range of assets (including real estate and commodities), and are subject to fewer risk concentration requirements and exempt CIU are subject only to certain requirements since these may only be sold to a restricted investor base (those able to make a minimum investment of $100,000, and with at least $1 million in financial assets. The Exempt CIU allow for hedge funds and other higher risk alternative investment vehicles.
