The newly-established First Islamic Investment Bank (FIIB), based in Bahrain, says a private placement to raise equity from Gulf Arab and Southeast
Asian investors has been oversubscribed. The bank is thinking about increasing its capital above an original target of $50 million.
‘FIIB’s private equity placement has been oversubscribed by 50 per cent as of 25 March,’ the bank says in a statement. ‘Due to this oversubscription, First Islamic is considering a capital increase [above $50 million].’ This is subject to discussions with institutional investors in the Gulf and Southeast Asia and the approval of the Bahraini authorities. The offering, intended to close in January, will now finish in April (MEED 10:1:97).
FIIB, founded by Saudi and Kuwaiti investors, says it will concentrate at first on corporate finance and asset management in the Gulf and Southeast Asia, while making private equity investments for itself and clients in the US, Europe and Asia. The bank forecasts that it will be making a net return on capital of 10.8 per cent by 1998, rising to 33.3 per cent by 2001.
The bank owns 35 per cent of a Malaysian company, Commerce MGI, which has advised on a number of Islamic debt financings in Malaysia including a
$300 million offering from an airline. Islamic debt securities pay returns based on the performance of an asset rather than a predetermined interest rate. FIIB says its first investment product will be an Islamic global equity fund, which is now ready to be launched. The fund will be managed by Sanford & Bernstein of the US.