Islamic Banking

World’s First Shariah-Compliant Private Equity Fund Launched

Bob Reynolds, 22 May 2007

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The world’s first Shariah-compliant private equity fund has been launched by CORECAP, a Middle East regional investment and advisory firm.

CORECAP, which specialises in alternative investments, announced its first US$ 150 million CORECAP Islamic private equity fund I (CIPEF I).

CIPEF I will fund Shariah-compliant private equity investments in the Middle East and North Africa region through equity participation via a unique mezzanine structure. The fund will acquire majority stakes in stable and mature businesses through funding growth capital, MBOs, MBIs, LBOs and recapitalisations.

The firm claims to have achieved a private equity breakthrough in Islamic Finance, making it the first private equity fund that offers a Shariah-compliant mezzanine structure worldwide. This structure, says CORECAP, overcomes one of the main traditional funding barriers for the growth of the Islamic private equity industry.

The fund was announced at a global Islamic Finance forum in Qatar where the industry was valued at $800 billion. Specialists said that it is growing by an estimated 15-20 per cent a year.

Khaled Hassan Rashed, CORECAP’s, said: “CIPEF I is the first of our family of Islamic private equity funds. It will invest in Shariah-compliant businesses across a wide array of industries. CIPEF I is a close-ended six year fund targeting a minimum internal rate of return of 25 per cent a year and open to institutional and high net worth and investors with a minimum investment requirement of $3 million."

“The launch of CIPEF I stems from our belief that Islamic private equity is one of the most suitable answers to the ever increasing demand for structured Shariah-compliant investments. We see private equity as a natural fit for such investments as it is based on investment in the real economy and sharing risks and rewards through partnership. Our team has identified an eminent pipeline of transactions that fits the investment criteria of the fund and caters to the huge demand and appetite of our investors. We believe that Islamic private equity is set to outgrow conventional private equity in the MENA region within the next five years and is estimated to reach $41 billion by 2011. We are committed to playing a leading role in the development of Islamic private equity in the industry as a whole.”

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