The International Investor (TII), an Islamic financial services firm based in Kuwait, has agreed to provide a package of Islamic asset management products to a Kuwaiti conventional bank. TII’s chairman Adnan al-Bahar says it aims to sell the package, tailored for wealthy private investors, to other banks in the Gulf.
‘We’ve just signed a strategic agreement with Gulf Bank and we have serious negotiations in other places in the Gulf,’ Al-Bahar told MEED on 21 November. ‘Our ideal partner would be one of the top three conventional commercial banks in each market.’
Under the agreement with Gulf Bank, TII will provide a range of investment products for the conventional bank to distribute to its retail customers. The Islamic firm will manage the money raised on a wholesale basis and provide advice to the conventional bank. TII’s name will be on the products, to underline that they are compatible with the sharia.
The advantage of such a deal for a conventional bank, Al-Bahar says, is that it can offer Islamic investments to its clients without having to create the products itself. For its part, TII gets more assets to add to its managed portfolio without having to build up a retail network. ‘We made a conscious decision at the start that we’re only a wholesale player. We can’t be a local retail player everywhere,’ says Al-Bahar.
TII is owned by the Kuwaiti government and private investors and listed on the Kuwait Stock Exchange. In addition to asset management, TII is also involved in corporate finance in the Gulf, underwriting share issues and Islamic project finance and raising funds for firms to expand their production capacity.
Al-Bahar said he expected the size of TII’s managed funds to rise substantially during 1996 and added that profits would be about 15 per cent higher. In 1995, TII made profits of $7.6 million. The company manages a number of equity, leasing and currency funds and is planning to launch another soon to invest in small-capital stocks in Europe and the US. The fund will be listed in Dublin.