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Thursday, 9 July 2009

Nigeria: NSE Admits Lotus Capital's Islamic Halal Fund For Listing

Lagos — The Nigerian Stock Exchange (NSE), on Monday admitted Islamic Halal Investment Fund its first Shari'a compliant investment instrument to its Daily Official List. The ethical investment fund managed by Lotus Capital a full-fledged ethical financial institution structured along the Islamic legal code, is committed to providing innovative asset management, private wealth management and general financial advisory services.

According to Managing Director, Lotus Capital Limited, Mrs. Hajara Adeola, "we are positive that having the Halal Fund listed on the stock exchange will increase the visibility of the fund's value to our investors and ensure greater transparency and accountability. Having worked hard to get listed, we will strive harder to maintain our integrity by offering our present and future customers innovative and rewarding investment products without violating their religious beliefs or personal values."

Continuing, she added that: "At Lotus Capital, we adhere strictly to a code of ethics that does not patronise usury. Our operations are open and transparent and are reviewed by a Shari'ah Advisory Board. This and many other "checks and balances" ensure that our funds are not used for prohibited activities."

Adeola also expressed confidence that judging from the reception and acceptance enjoyed by the company during its debut in the market five years ago, in 2004, as well as the initial offer of Halal Investment Fund last year, the current bid to offer an exit window to investors through the Nigerian stock market will also be a huge success. She hinted that going by its pedigree, the fund would be actively traded not only by adherents of the Islamic faith, but discerning investors seeking outlets for wealth preservation and returns.

With the fashioning of Islamic capital market products, many believe that Nigeria will be able to attract some of the latent Islamic funds in global financial institutions said to be at US$1.3 trillion. Another advantage, it is believed, is that the nation's financial system will benefit from the Islamic financial market estimated to be US$230 billion in size, with an annual growth rate of 12 per cent to 15 per cent.

Ahead of Monday's listing, the company recently held a breakfast forum with the theme: "Islamic investments as an alternative to other forms of investment," with Prof Monzer Kahf, an Islamic Finance Consultant and Neil D. Miller, Partner, Global Head, Islamic Finance at Norton Rose, as key speakers. Both experts educated stakeholders in the financial sector on the new approach to Islamic investment and how such can contribute to the development of the Nigerian economy.

A statement by Lotus Capital noted that the company provides specialist financial advice on how budget deficits by state governments can be drastically reduced. This, the statement noted, for example, can be achieved through careful planning and implementation of development projects, which make use of Islamic bonds (Sukuk).

Lotus Capital is registered with the Securities and Exchange Commission (SEC) as Fund Managers and Corporate Investment advisers.

Islamic finance uses sale, leasing and sharing-based modes like murabaha, ijara and musharaka to conduct its business. It also looks at the value creating developmental impact of transactions, which introduces the much-needed moral standard into finance and investment.

The introduction of Islamic capital market products like Lotus Capital is pioneering, according to experts is expected to help Nigeria's market attract some of the huge funds packaged in Islam compliant funds. Such funds are described as those that is not invested in activities that conflict with the principles of Islam, aside from representing "an assertion of religious law in capital market transactions where the market is free from prohibited activities and elements such as riba (usury), maisir (gambling) and gharar (ambiguity)."

So far, there are over 250 Islamic financial institutions currently operating in about 75 countries worldwide, with more than 100 Islamic equity funds managing assets in excess of US$5.0 billion.

The growth and development of Islamic Capital Market has been fast-paced, despite beginning as recently as 16 years ago, pioneered by Malaysia, which established the first Islamic equity unit trust fund, Arab Malaysian Tabung Ittikal. The following year, the first full-fledged Islamic stock broking company, BIMB Securities Sdn Bhd was born, with the Securities Commission formed Islamic Capital Market Unit evolving into a full-fledged department, a year later. The Shariah Advisory Council (SAC) was established in 1996; just as the country's Minister of Finance launched the Capital Market Master-plan with 13 recommendations formulated altogether. Malaysia followed all this achievements with its establishment as an international centre for Islamic capital market activities in 2001. Within this period, the country introduced the first global corporate Sukuk (a ducument or a certificate, which represents the value of asset), the Guthrie Sukuk, which created a paradigm shift in the international Islamic financial market also in 2001, while it introduced the first global sovereign Sukuk, The Malaysian Government Sukuk, which was a huge success, achieving more than twice over subscription in 2002.

With all of this, the Malaysian Government is actively promoting the Labuan International Offshore Financial Centre as a global centre for the ICM; a comprehensive tax incentive package for Islamic securities similar to conventional securities was proposed under the Federal Budget 2004, and has since been implemented,

Islamic Finance has been rated by the International Monetary Fund as one of the world's fastest growing financial sectors.
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