Dubai-based sharia-compliant mortgage company Amlak Finance has established a wholly-owned subsidiary, Amlak Investments (AI), to conduct a review of its investment portfolio and manage future investments. The new company has a paid-up capital of AED 500 million ($136 million) and will seek investment opportunities in the oil and petrochemicals sector in the Gulf, the telecommunications sector across the Middle East and real estate globally. AI plans to invest directly in public equities and to launch blue chip and property equity funds by the end of the year.
'This is the best time to invest in the stock market,' says Amlak deputy chief executive officer Shahli Akram Juma. 'The market is getting back to normal and is no longer driven by rumour or sheer liquidity. Investors have come back to their senses.' AI is looking at investing as founders in new Islamic finance institutions before they stage an initial public offering (IPO) of shares.
The new company will also offer wealth management and advisory services to family businesses. 'Fee income from advisory services is critical to reduce risk and get a better return,' says Juma.
Amlak Finance plans to fund its expansion plans through the issue of a $350 million-500 million asset-backed securitisation in September. The securitisation will be rated by Moody's Investors Service and Fitch and arranged by Emirates National Securitisation Corporation.
'We are diversifying our funding sources and off-loading liabilities from our balance sheet,' says Juma. 'We don't have access to customer deposits, so we are trying to generate low-cost funds over the long term, targeting foreign investors.'
The company is planning to offer mortgages in Saudi Arabia, Syria and Morocco, continuing its established practice of partnering with Dubai-based developers Emaar Properties. 'There are few hardcore mortgage players in Saudi Arabia and the growth potential is high,' says Juma.