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Sunday, 7 December 2008

Islamic Bank of Britain Seeking Private Cash to Expand


The Birmingham-based Islamic Bank of Britain is looking to expand after a successful trip to the Middle East to find development funding.
And while the amount raised may pale in comparison to the pounds 5.8 billion package Barclays got from Gulf investors, the bank says it will be using the money to expand in response to a huge increase in demand for its services.
The bank raised an extra pounds 7.5 million from one of its Middle East investors, after negotiations handled by a team of Birmingham professionals.
Although it is listed on AIM, IBB has found it difficult to get funding from there, as has almost every other firm on the list.
AIM has been particularly badly hit by the global financial downturn, with many of the larger listed companies choosing to leave in recent days.
So the bank had to go to private investors for funding, in a deal which was managed by the Capital Markets team at Grant Thornton in Birmingham.
As the bank's nominated adviser, Grant Thornton's Charles Cattaneo and Ian Stan way and Keri Rees, along with Steve Hacking at Ever sheds in Birmingham, worked to support the bank to raise the necessary funds, which they described as "a significant challenge" in the current economic climate.
The bank is awaiting shareholders' approval as the funds are coming from an existing investor based in the Middle East, which means that the placing needs shareholder approval under the rules of the Takeover Code which is expected at a general meeting of IBB on December 19.
Mr Cattaneo, who is the capital markets partner at Grant Thornton, said: "With little fundraising activity taking place on the stock market, and particularly on AIM, it is excellent news that the Islamic Bank of Britain was able to raise the funds necessary to help develop its business in the UK. Given the pressure on the banking sector at the moment it is particularly pleasing to be able to assist in this fundraising."
Birmingham is trying to promote itself as a global hub for Islamic finance, which is becoming more popular as traditional Western finance falls out of favour.
Earlier this month a group led by the city council's inward investment service visited a major sector event in Bahrain to talk up the city.
Located in Birmingham is working with the IBB, the West Midlands Business Council and Birmingham Forward to promote Birmingham.
In recent months the IBB has seen more people take up accounts, even non-Muslims.
It said it had seen significant growth in non-Muslim customers since the onset of turbulence on financial markets because Islamic banks, which are run by strict religious principles, are largely seen as insulated from the credit crisis.
The Islamic Bank of Britain is the UK's only stand alone fully Shariah compliant retail bank. In July it launched its Home Purchase Plan, billed as "the mortgage alternative", which enables customers to purchase their homes in line with Shariah principles.
The plan is based on the Islamic financing principles of Ijara (leasing) and Diminishing Musharaka (partnership).
(Birmingham Post)
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