Gulf investors are launching a new $10 billion Islamic bank and plan a $3 billion initial public offering in the fourth quarter to tap interest in sharia-compliant institutions, bank executives announced on April 19.
Adnan Ahmed Yousif, chairman of the Union of Arab Banks told Reuters on the sidelines of a banking conference in Dubai that the new bank was in the "final stages" of establishing its founding shareholders and would be formed by the end of 2009.
Demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has soared, and assets that comply with Islamic law are estimated at between $700 million $1 trillion.
Islam bans interest, investing in prohibited sectors such as gambling, pornography and alcohol and stipulates that risk and reward be shared among all those in the business venture.
Saudi Arabian businessman Sheikh Saleh Kamel is behind the plan, which has been in the pipeline for at least two years. Kamel earlier owned National Commercial Bank of Saudi Arabia which was later taken over by the Saudi Government. He is ranked 114th on the Forbes list of the World's richest people. He is worth $5.73 billion currently and has business interest in coded TV channels for Middle East, Africa and North and South America.
"The bank has raised $3.5 billion including $1 billion from the management. We are hopeful it will be ready by the fourth quarter," Sheikh Saleh told Reuters, adding that bankers were still choosing a name for the bank.
Yousif said the bank had attracted eight shareholders so far as part of the private placement, including private and semi-governmental Gulf investors.
Yousif, who is the chief executive of Al Baraka Banking Group BARKA.BH, said Al Baraka was still considering whether to invest.
"By the end of the year, you will have a private placement and an IPO," Yousif said.
"The IPO will be about $3 billion and will be listed in Bahrain and Dubai," he said, adding it would be listed NASDAQ Dubai and would take place in the fourth quarter.
Ernst & Young is advising on the bank's formation, Yousif said.