The Ibn Battutah Asian Growth Fund will begin investing in Asia's Islamic markets by the end of May, although commitments were well below the original target figure. By the initial closing at the end of April, the fund had raised $17 million-18 million against plans to raise $100 million (MEED 17:2:95).

The arrangers of the open-ended fund, Banque Indosuez Bahrain Offshore Banking Unit and Carr Indosuez Asia, say commitments when the fund was announced at the beginning of the year had reached $75 million. But market conditions have since deteriorated and many of those commitments dried up forcing the launch date to be put back until May.

'In this region, the cash flow is vastly different from the cash flow of other markets,' says David Caillard, senior manager of capital markets at Banque Indosuez in Bahrain. 'The market is dominated by private capital, and investors are more sensitive than institutional investors outside the region.' Most of the capital raised for the fund came from individual Gulf investors, who are cautious about invest-ing at a time of volatility in emerging markets.

The funds will mainly be placed in equities in Asian countries with a Muslim majority - Malaysia, Indonesia, Pakistan and Bangladesh - as well as other markets with significant Muslim minorities, including Thailand, Singapore, the Philippines, Sri Lanka and India.

The fund was launched by Al Hillal and will be managed by the Hong Kong- based Indosuez Asset Management. It is registered in Labuan, Malaysia, but is expected to seek a listing on the Bahrain Stock Exchange.

Other products aiming to invest in Asian markets and looking for Gulf investors have faced similar difficulties in raising funds. The London- listed Oryx (India) Fund closed at $14 million, compared with plans to raise up to $100 million, and an India fund planned by the Bahrain-based TAIB Bank has been delayed until interest in the sub-continent picks up (MEED 12:5:95).