The sovereign wealth fund has set up Dubai Sharia Asset Management to attract investments from other sovereign wealth funds, banks and wealthy individuals in the Middle East.
Dubai World will increase its investment in Dubai Sharia Asset Management if the initial investment proves successful. The asset management arm gives Arab investors access to sharia-compliant hedge funds for the first time.
Dubai World hopes that Dubai Sharia Asset Management, a joint venture with US-based Islamic finance house Sharia Capital, will benefit as the exclusive distributor of the five hedge funds that have been certified as sharia compliant.
“We want tens of billions of dollars,” says Eric Meyer, chairman and chief executive officer of Sharia Capital. “That is the size of the ambition.”
Dubai World subsidiary Dubai Multi-Commodities Centre (DMCC) will oversee development of the asset management business.
“The $250m needs to be seen in the context of establishing a strategically important new business for us,” says David Rutledge, chief executive officer of DMCC. “I do not want to quantify the investment as a proportion of our total assets.”
Rutledge declined to reveal to rate of return DMCC is expecting from the investment. The funds are managed by BlackRock, Ospraie Management, Tocqueville Asset Management, Zweig-DiMenna International Managers and Lucas Capital Management.