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Saturday, 8 September 2007

Saudi Investors Strongly Support UK Takaful Firm

Investors from the Kingdom account for 50 percent of the $40 million raised from Gulf investors through private placement for the launch of an independent Takaful (Islamic insurance) company in the UK, Bradley Brandon-Cross, chief executive officer of British Islamic Insurance Holdings (BIIH), told Arab News in an interview. “We have raised $40 million through the Gulf states, of which 50 percent of the amount came from Saudi Arabia alone. The intention is to raise $160 million through the IPO and another equal amount through a second tranche to increase the capitalization to $350-360 million in due course,” he said. He noted that prominent Saudi businessman Abdul Aziz Hamad Al-Jomaih is the chairman of the new company and has invested $4 million in the company. When capitalized, it is expected to be the second largest Takaful firm in the world and the market leader in the UK. BIIH envisages raising $500 million over a five-year period. Syed Mohammed Nadeem Mujtaba, managing director of Bahrain-based Gulf Ventures Corporation, and Michael David Ross, director of BIIH, were also present. Speaking on the activities of BIIH, Bradley said it will first target British Muslims for Takaful insurance, since they number over two million out of the 15 million Muslims in Europe. The next target will be European countries, especially France and Germany, followed by the Gulf states and some Asian countries under a phased program. The CEO said that as part of its fund-raising drive, the company will float IPO on the London Stock Exchange in April next year. The shares, priced at 12.5 pence each, are also open for subscription to high networth individuals, institutional investors and family-owned enterprises from the Gulf. He pointed out that Islamic insurance was gaining wider acceptance not only among Muslims but also among non-Muslims, especially now that motor insurance is compulsory in Britain. Other target areas include insurance of buildings and their assets( such as home furniture, etc.) as well as the small and medium enterprises. He said the market “penetration rate is high and the returns on investments are attractive. “Our research shows that the GCC average per capita insurance premium is $131 compared to $ 4,600 for Britain. That explains the great deal of interest among the Gulf investors.” Bradley said their company has set up a three-member Shariah committee to vet insurance products before they are launched on the market. The members include Sheikh Nizam Yaquby (Bahrain), Dr. Mohammed Elgari (Saudi Arabia) and Mufti Abdul Kader Barkatullah (BIIH Shariah committee’s member). The CEO said BIIH will also promote ethical investments by channeling revenue from the premia into Shariah-compatible investment vehicles. “Ethical insurance resonates with Muslim investors. We are not trading on their beliefs, but we are providing them something that is compatible with their beliefs.We are also keen that non-Muslims should also come on board, since they do realize the competitive advantages of Takaful insurance compared to the plethora of other insurance products on the market.” - (AN, 8 Sep 07)
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Alfalah Consulting - KL: www.alfalahconsulting.com 
Islamic finance consultant: www.ahmad-sanusi-husain.com 
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