Shamil Bank, a leading Bahrain-based Islamic commercial and investment bank, today announced the launch of the US$100 million Shamil China Realty Modaraba, the first ever Islamic property fund for investment in the Chinese real estate market. The Modaraba will invest in the Xuan Huang China Realty Investment Fund Limited (“the Fund Company”), a joint venture between Shamil Bank and CITIC Group, a major state-owned Chinese conglomerate.
Xuan Huang China Realty Investment Fund Limited will undertake high-quality, Sharia’a compliant investments in land development projects, as well as residential, commercial and industrial properties that offer significant potential for capital appreciation.
CIAM-Shamil Assets Management Limited, owned by Shamil Bank and CITIC Group, will act as the Investment Manager and will originate, evaluate and execute those transactions that meet the Fund Company’s stringent investment criteria.
CITIC Group is among the largest state-owned entities in China with total assets in excess of US$86 billion. CITIC Group and Dar Al-Maal Al Islami Trust (“DMI”), of which Shamil Bank is a subsidiary, have been seeking to build a long-term relationship through which to develop a number of investment opportunities in the Chinese market, with this representing the first of such ventures.
Having implemented the corporate structure and executed the relevant agreements in September 2005, Shamil Bank and CITIC International Assets Management (“CIAM”), CITIC Group’s asset management arm, have since built a promising pipeline of investments and are in an advanced stage of evaluating a number of opportunities. The sponsors have already committed US$20 million of the capital of the Fund Company, with Shamil and CITIC committing US$12.5 million and US$7.5 million, respectively.
“We are excited by the promising investment climate that exists in the Chinese market and are delighted to offer this ground breaking opportunity to investors,” said Mr. Mohamed Hussain, Chief Executive of Shamil Bank. “In CITIC Group we have a strong partner that brings great value through its knowledge and relationships in China,” he added.
“The Shamil China Realty Modaraba represents a significant opportunity for portfolio diversification in a high-growth market and a rapidly expanding sector within the Chinese economy. We are confident that CITIC Group’s resources and knowledge of the Chinese market combined with Shamil’s expertise and strong track record in executing global real estate transactions would help deliver superior returns that meet investors’ expectations,’’ said Mr. Ahmad Tayara, Head of Investment Banking, Shamil Bank.
“The Modaraba is primarily targeted at institutional investors in addition to high net worth individuals throughout the GCC. The Modaraba rate of return is estimated at 18% annually over its four-year term and it is open for subscription until the end of February 2006,” explained Mr. Tayara.
China’s economy continues to witness unprecedented growth, having increased at an average annual rate of more than 9% over the past two decades. Furthermore, over the last four years, the real estate sector has shown robust growth of more than 20% on an annual basis.
Mr. Lo Wing Yat, CIAM’s CEO, said, “There is strong interest in China from among the international investment community and CITIC is keen to extend its expertise in real estate and asset management, among other areas, in order to encourage FDI and to facilitate investor access to attractive opportunities. There is significant untapped potential across a number of key sectors, including real estate. We believe that the sustained economic growth, rapid urbanisation and the growing demand for better housing and quality commercial space provide strong prospects for the real estate sector in China.”
“CITIC Group is delighted to work with Shamil Bank in developing this innovative investment opportunity that builds on these positive dynamics,” Mr. Lo added.
Also commenting on the introduction of this groundbreaking Modaraba, Mr. Abdulhakim Al-Mutawa, Head of Private Banking at Shamil Bank, said “Shamil Bank is committed to providing investors with innovative, well-structured and highly rewarding opportunities. We view this Modaraba as representative of the many diverse and compelling products that Shamil Bank has recently introduced and continues to bring to the market. We have successfully concluded a number of transactions in the GCC, Europe and the US and, with the Shamil China Realty Modaraba, we are now poised to expand our global footprint and provide GCC investors with access to opportunities in this fast growing Asian market.’’
