Bahrain Islamic megabank seeks to raise100bn

The $1 trillion Islamic finance industry has suffered from a lack of large institutions able to handle sizeable deals.

A new Islamic investment bank to open next year in Bahrain is planning to raise $100 billion in its first 10 years to fund projects in Muslim countries and challenge the top underwriters in the sukuk market.

The lender, scheduled to begin operations in January, will start with $10bn of capital and help provide financing for “profitable” ventures among the 57 member nations of the Organization of the Islamic Conference, Abdulmohsen Linjawi, general manager of the Business Owners Union, an OIC unit, said.
The lack of institutions within the $1 trillion Islamic finance industry capable of handling large deals that conform to the religion’s ban on interest spurred Malaysia to announce last month it will issue a license to Asia’s first Sharia-compliant “mega” bank.

Offerings of Islamic bonds, known as sukuk, more than doubled this year to $16.8bn, and the debt has returned 6.7 percent in 2011, compared with 6.4 percent on other developing-country bonds, according to JPMorgan Chase & Co’s Global Emerging Markets Bond index.