LONDON (Reuters) - The UK’s largest Islamic compliant bank, Bank of London and the Middle East (BLME), has delayed a number of fund launches as the financial crisis constrains clients in the Middle East, its CEO said on Tuesday.
Humphrey Percy told the Reuters Islamic Banking and Finance Summit that the bank’s plans to bring equity and real estate products to the market had to be put on the backburner, citing one global equity tracker and one emerging markets equities fund. Both funds are benchmarked against FTSE Sharia series.
“They are ready to go, but we have not felt to date that the market is propitious for the launch of those funds. Certainly for the likely investors in these funds, predominantly from the Middle East, it is not the right time,” he said.
“We are going to hold off launching these funds until we think there is more likelihood to suceed,” he said.
One fund which has been delayed but is now poised to launch later this year with $70 million will aim to exploit a niche market for office space for doctors in the United States.
“We have identified the medical office building sector as a pretty good hedge that has held up extremely well compared to other commercial property. There is always going to be demand from doctors and (medical) consultants,” he said.
BLME has also raised 50 million pounds ($73.64 million) from an institutional investor for a UK property fund and plans to raise 20 million pounds by June for a pooled UK property fund.
“Our view of the UK property market is that it has a number of extremely attractive possibilities to domestic investors, but even more for international investors who also get the benefit of the exchange rate,” Percy said.
Islamic-compliant investment products avoid holding stocks involved with gambling, alcohol, pork products or pornography, as well as certain types of derivatives. They also avoid financial investments which fail to meet Sharia law rules on interest payments and highly-leveraged firms.
BLME said earlier this month it was preparing to float on the London Stock Exchange in 2010. Percy said the full listing would likely be in the second part of 2010 and added that the bank could in time opt for a second listing in the Middle East.
(For summit blog: http://summitnotebook.reuters.
Editing by David Cowell