Sabana REIT, Khazanah sukuk to jumpstart Singapore sharia finance


SINGAPORE, June 9 — More Singapore companies are keen to raise Islamic financing after a landmark sharia REIT and local currency sukuk from Malaysia’s Khazanah Nasional stirred the city-state’s interest in wholesale Islamic banking, OCBC Al-Amin said today.

Companies were exploring sukuk and Islamic private equity deals as an avenue to reach a broader class of investors, including those who could only put their money in assets that complied with religious principles, OCBC Al-Amin’s chief executive said.

These included Middle Eastern investors and government funds that invested according to Islamic tenets, such as Malaysia’s Pilgrims Fund, Syed Abdull Aziz Syed Kechik said.

“We want to capitalise on that,” Syed Abdull said. “We can do sukuk, syndication, private equity with these customers who, to them, it’s an advantage because it’s a new set of investors.”

OCBC Al-Amin, which is a subsidiary of OCBC’s Malaysian unit, was working on Singapore-dollar Islamic financing deals, he said, but declined to give details.

Malaysian state investor Khazanah sold SUS$1.5 billion (RM3.7 billion) in Islamic bonds last August, Singapore’s largest sukuk sale, in a transaction that drew a demand of 4.3 times book size.

Sabana REIT, the world’s largest sharia-compliant property trust, sold 508 million units at SUS$1.05 each in its IPO in November. The IPO was 2.5 times subscribed.

More sharia banking deals could mark a step forward for the US$1 trillion (RM3 trillion) Islamic finance industry in Singapore, which has seen lukewarm interest despite regulatory and tax measures.

Issuers from Singapore accounted for US$74.4 million or 0.5 per cent of total global Islamic bond sales of US$14 billion last year, Thomson Reuters data showed.

In 2009, Singapore’s central bank announced regulatory and tax measures to boost Islamic banking including allowing Singapore-dollar Islamic bonds to have equal tax, regulatory and liquidity treatment as Singapore government bonds. — Reuters




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