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Sunday, 23 March 2008

Amwal unveils first Shariah compliant real estate fund

(Doha • Amwal) Qatar's major investment banking and asset management company yesterday announced the marketing of the first Shariah compliant real estate Mezzanine Fund in the country.

The company will soon open subscription for Mezzanine Investment Partners Fund I Ltd and Mezzanine Investment Partners Fund II Ltd, the first two of a family of funds co-sponsored with Dubai based investment firm Shuaa Capital and Kaupthing Bank.

These two funds will total $250m, and will be seeded by up to $100m by the sponsors, who will raise the remaining $150m from a mix of Qatari, GCC and international investors. Mezzanine Investment Partners Fund I will be US Dollar denominated, while Mezzanine Investment Partners Fund II will be Shari'a compliant and Qatari Rial denominated.

The funds target a yearly return in excess of 15 percent, which will be generated through an investment in a Shari'a compliant mezzanine debt issued for AL Waab City WLL, the largest privately held real estate development in Qatar promoted by NBK Holding.

This identified investment target that presents a relatively low risk profile is an additional advantage for potential investors, as it guarantees that the funds raised will be put to work in a sound project shortly after the fund raising, said Amwal.

Set up as 10-year Cayman registered entities, the funds could in practice, due to their single investment, be compared to a more standard sukuk issue. Maturity may be shortened in case of refinancing of the mezzanine debt facility by Al Waab City, and the funds are likely to pay dividends on their shares from the third year of investment.

"With the establishment of these new funds we have created for regional investors the conditions for more comprehensive access to real estate investment, by providing exposure to what we have identified as the rapidly growing market of high return Shari'a compliant securities in the real estate sector," said Amwal CEO, Dr Lavigne du Cadet. "Through this structure, we have also widened the range of financing options we are able to provide to certain professional real estate developers by adding an important element which enables them to bridge efficiently with a larger pool of financing."

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