The First Islamic Venture Capital Company hopes to raise up to dollars 400m (pounds 230m) in a simultaneous share issue in the UK, the Isle of Man, the Middle East and the rest of the Islamic world. About 10 per cent of the funds are expected to be raised in the UK. The shares will be listed on the Irish Stock Exchange in November. The company will have a fixed life of 18 years.
Muslims are faced with particular problems when they invest. To quote the prospectus (illustration, right), 'God has permitted trade and forbidden interest.' As Muslims are not permitted to agree to receive a fixed or pre-determined return like interest or rent, the First Islamic portfolio will all be focused on non-interest-bearing shares.
Investments in banks and finance houses will be precluded, as will be investments in breweries, tobacco companies, casinos and any other businesses considered 'to be against the common good of society'.
'The basic philosophy is that we can invest in anything that enhances life,' said Derek Bartlett of First Islamic's investment managers, City Financial Asset Management. 'You must not do anything that harms life.'
First Islamic will, therefore, invest in agricultural enterprises, utilities, certain engineering projects and some retailing companies. All investment decisions will be scrutinised by a committee of religious advisers.
First Islamic is being marketed in the UK through a group of selected financial intermediaries. It will offer its shares to a target list of about 200 mosques and chambers of commerce in the Muslim centres of London, Leicester, Bradford, Bristol, Birmingham and Glasgow. Investors from outside the Muslim community will also be welcomed.
About 70 per cent of the funds raised by the company will be invested in venture capital projects, with 40 per cent to be invested in Islamic countries and 30 per cent in Europe. The remaining funds will be invested in highly liquid international shares to provide the liquidity and income that, in other portfolios, would come from interest-bearing investments.
The Mohammad Group, the promoter, is not a household name in Europe but, according to City Financial Asset Management, it is one of the largest companies in Pakistan, with interests in a range of industries including film production, media, real estate, textiles and engineering, and with a balance sheet total of dollars 86m.
(Photograph omitted)Reuse content