A new report by Big Four advisor Ernst & Young says the Islamic alternative investments and private equity markets are set for major growth.
The First Annual Ernst & Young Islamic Funds & Investments Report, which will be launched on Saturday at The World Islamic Funds & Capital Markets conference in Bahrain, will point to key growth areas for the sector.
Sameer Abdi, group head of Islamic financial services, and Ali Arsalan Tariq, a consultant, from Ernst & Young Bahrain, will report on the "massive potential of the Islamic finance market". Mr Abdi said: “The Islamic funds industry has grown tremendously in size and product depth in the last five years. With ever increasing investor demand to satisfy, there remains immense potential for the future growth of this sector.”
The report will advocate that the industry will need to design what it calls holistic business models to maximise the potential growth in client business. It says that the average fund size has increased to $284 million from $230 million in 2005.
Ernst & Young’s financial services group said that total assets for all the Islamic banks globally (estimated to be 300 banks) amount to $170 billion. In addition, the deposits of Islamic banks stand at around $140 million compared to the $13 trillion held by commercial banks.
Around 92 per cent of Islamic banking assets are located in the Middle East, with the majority share (60 per cent) in Iran, which was followed by Saudi Arabia (13.5 per cent), Kuwait (8.4 per cnt), United Arab Emirates (6.4 per cent), Egypt (3 per cent) and Jordan (1.5 per cent).
Around 85 per cent of the global Islamic finance institutions have a paid-up capital of less than $25 million.
The E&Y Islamic financial services group has been engaged to research a pre-feasibility study for establishing the highest capitalised wholesale Islamic bank in the world.