JEDDAH: Dar Al-Maal Al-Islami Trust (DMI), described as a pioneer in Islamic banking and economy, is planning to raise its capital by $100 million to $400 million with equity capital being $550 million through a rights issue to finance expansion of its entities.
“The money will be raised from the existing 7,500 shareholders, who are from across the world including the Middle East, Asia, Africa and Europe,” DMI Chief Executive Officer Khalid Abdulla-Janahi said.
“DMI is not just as it was in 1981 when it was founded. Now, DMI has an extensive network of well-integrated regional subsidiaries enabling it to respond to local business needs and conditions.”
Janahi also commended the efforts of Islamic banking pioneers Prince Mohamed Al-Faisal, who is the chairman of the board of supervisors of DMI, and Saleh Kamel, chairman of Albaraka Banking Group and president of Dallah Albaraka Group, for their vision about Islamic banking, which is spreading very fast worldwide.
Janahi said DMI shares are not tradable but shareholders can buy and sell shares among themselves. “DMI is creating a fund to be managed by an independent brokerage office based in Bahrain. The current shareholders can buy and sell shares through this brokerage, making it an easier process to execute any transaction,” Janahi explained. “The fund will be created any time in 2009.”
“The $100 million capital to be raised will be used for the expansion of DMI entities this year and in 2009,” Janahi said, adding that it is over $2 billion in value when you count the market capitalization of the other entities.
Under DMI, there is Ithmaar Bank in which DMI is the largest single shareholder with a 40 percent stake. There were major developments last year concerning Ithmaar Bank, including the purchase of DMI’s 60 percent stake in Shamil Bank of Bahrain.
In November 2007, Ithmaar Bank acquired the remaining 40 percent of the shares in Shamil Bank by issuing 12 new shares in exchange for every 10 shares of Shamil Bank, following which Shamil Bank has now become a wholly owned subsidiary of Ithmaar Bank.
Ithmaar Bank also increased its investments in Solidarity Company, the leading provider of Takaful products in the Gulf, and in First Leasing Bank, the only bank specializing in equipment leasing in the Gulf Cooperation Council (GCC). DMI’s wholly owned subsidiary, Islamic Investment Company of the Gulf (Bahamas) Ltd., too made considerable progress during 2007. Funds under management grew and the company successfully exited several investments providing very satisfactory returns to investors.
Faisal Islamic Bank of Egypt had another successful year reporting an increase in operating profits and further growth in total assets. The bank continues to retain its position as the leading Islamic bank in Egypt providing a wide range of products and services to both retail and corporate customers. Faisal Islamic Bank of Egypt is 40 percent owned by DMI.
Ithmaar Bank has been active in developing a strong pipeline of private equity, project finance and investment opportunities which, it is believed, positions it for further rapid growth in the coming years. Ithmaar Bank was set up four years ago and two-and-a-half years ago it went public.
Ithmaar Bank has a 67 percent stake in Faysal Bank Ltd. of Pakistan and a 26 percent share in Bank of Bahrain and Kuwait (BBK).
“The reason we bought stake in BBK is because it has aggressive plans for India. At present, BBK has two branches in India, one in Mumbai and the other in Hyderabad. BBK is also planning to open 10 branches in India, and especially eyeing its presence in the southern state of Kerala,” Janahi said. He added that Ithmaar Bank has successfully led a consortium of regional institutional investors to launch Naseej, the first fully integrated infrastructure and real estate development company in the Middle East.
With an authorized capital of 2 billion Bahraini dinars and paid-up capital of BD300 million, the fully integrated infrastructure and real estate development company will service the entire value chain of the real estate and construction industry.
“Naseej is set to usher in an era of change for the region’s construction sector, which is set to reap the benefits arising from the company’s economies of scale,” Janahi added.
Janahi said the DMI dividend yield is about seven percent now and “we want to maintain this yield for the next three to four years. He added, “We do not want to reduce dividend but will try to maintain it.”
Due to the booming demand for infrastructure, agriculture and hospitality sectors, Janahi said Ithmaar Bank has joined with Gulf Finance House (GFH) and Abu Dhabi Investment House (ADIH) to create these visionary new initiatives focused on driving market specific innovation across the Middle East, North Africa, South Asia (MENASA) region and beyond.
Ithmaar Bank announced the establishment of InfraCapital, the GCC’s first investment bank, AgriCapital, which will be a new investment vehicle focused entirely on serving agricultural ventures, and Hospitality Development Fund.
It will nurture and support opportunities across the global hospitality sector.
Janahi said, “With the launch of these new companies, we are confident that the region will have access to the resources and expertise necessary to continue its long-term growth and development. The creation of such entities is a clear manifestation of our commitment to the community and our desire to give back to the people, while at the same time, providing good returns to our shareholders.”
Janahi said the future of Islamic banking was very promising. It is expected to grow by 20 percent to 25 percent annually.
“What we lack is innovation in Islamic banking. At present, innovation in Islamic banking is done in London (England), Kuala Lumpur (Malaysia) and to some extent in Bahrain. Most of the money comes from the Gulf, so I feel there is a need for more innovation in Islamic banking in the region for its future growth,” Janahi said.
“We are at the forefront of Islamic banking. We are trying to convert conventional business into Shariah-compliant dealings,” he added.
