Bahrain-based UIB launched operations in May 2004, having been granted a licence by the Bahrain Monetary Agency (BMA – central bank) at the turn of the year. Capitalised at $111 million, the bank in mid-June published financial results for the first eight months of operations, showing revenues of $36 million and earnings of $17 million. UIB is a full-service Islamic investment bank, with five main business lines: corporate finance and capital markets; private equity; mergers and acquisitions (M&A); asset management; and takaful. It is the brainchild of nine Saudis and one Kuwaiti investor – Majid al-Refai, the bank’s managing director and chief executive officer (CEO).
‘We worked very hard to turn around such a return in our first eight months,’ says Al-Refai. ‘It’s important to start publishing results as soon as possible if you want to set yourself up for an IPO [initial public offering], because bourses like Bahrain and Kuwait demand at least three years of financials before a listing. We’re looking at an IPO maybe three-five years down the line.’ Al-Refai is proud of the fact that UIB enlisted global heavyweight UBS to raise the bank’s seed capital – the first Islamic institution to do so. ‘To have such a prominent institution involved sends a sign about our intention to ensure maximum transparency,’ he says.
Al-Refai is a veteran of the regional Islamic banking scene, having spent eight years at Kuwait Finance House and most recently being among the founding members of First Islamic Investment Bank, now Arcapita – a good omen given that institution’s fast-rising profitability. ‘While First Islamic started off very much focused on private equity and is now expanding into other areas, we will be a full-service bank from the start – the only Islamic investment bank doing all five independent business lines,’ says Al-Refai. ‘Of the five, the main focus will be corporate finance and capital markets, followed by turnaround private equity and then M&A, which will include us acquiring conventional institutions and taking them Islamic.’ With the current vogue for sharia-compliant finance, which has already led to several regional institutions converting their operations, the offering could be an attractive one. Performing the transition on family businesses will be a particular goal.
While real estate is viewed as too risky to be a major area of activity, one of the bank’s current priorities is a soon-to-be closed $52 million fund to invest in housing units in Riyadh, which has been approved by the BMA and mostly subscribed by Gulf investors.
In explaining UIB’s raison d’etre, Al-Refai cites the astronomical rates of economic growth in the Middle East and the concomitant development of regional capital markets, which has not been fully matched by the evolution of Islamic financial tools. However, the bank will not be wholly focused on the Middle East and has already established offices in Kuala Lumpur and Chicago, in addition to its headquarters in the Ahli United Bank building in central Manama. Work is under way to set up a London outpost to serve the European market – where the EU’s first Islamic investment bank is set to launch operations in early 2006, pending approval from the Financial Services Authority.
Raised in Mississippi, Al-Refai is a firm believer in the need for strong links between East and West and in the benefits for both Islamic and conv