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Tuesday, 15 April 2014

Gulf Finance House Plans Sukuk Issue

MANAMA: Gulf Finance House (GFH), Bahrain-based Islamic investment bank, plans to issue a sukuk or arrange new debt facilities of up to $500 million, it was announced yesterday.

The funds raised will be used to restructure the current liabilities, develop projects and for acquisitions of new businesses.

The announcement follows ordinary and extraordinary general meetings of the bank yesterday, with the board getting authorisation from shareholders to determine the final structure of the sukuk or the debt facilities.

GFH chairman Dr Ahmed Al Mutawa presided over the meetings, which saw approval of the board of directors' report on business activities for last year and the annual audited financial statements.

"Last year, we reported a net profit of $6.3 million, reduced operating cost by 20 per cent and successfully restructured debt," Dr Al Mutawa said.

"We also effectively executed our investment strategy, closing a number of transactions, while simultaneously making strong advances on maximising the value of our existing portfolio of companies and projects including preparing for a number of exits for the bank and our investors this year.

"The sum of these actions has resulted in increased market confidence in the bank, value creation and new and exciting opportunities, which we intend to develop over the coming months," he said.

Additionally, the shareholders approved the appointment of eight new members to the board for three years including Dr Al Mutawa, Mosobah Al Mutairy, Salah Nourideen, Faisal Abdulla Fouad, Bashar Mohammed Almutawa, Yousef Al Ghanim, Hafedh Fakher Mohammed and Khalid Al Khazraji. The auditors and the Sharia supervisory board have been reappointed for the year.

(Gulf Daily News / 15 April 2014)
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Hong Kong, Malaysia Spread The Word On Islamic Finance

On April 14, the Hong Kong Monetary Authority (HKMA) and Bank Negara Malaysia (BNM) held a joint Islamic finance conference in Hong Kong, to raise the level of interest in sukuk as a viable financing and investment instrument amongst the business and financial community in Hong Kong and Mainland China.

The conference saw regulators and market leaders in the Islamic finance field discuss a wide range of issues, from the latest trends in the global sukuk market to business opportunities for Islamic finance in Hong Kong, the practical issues in structuring sukuk and the Islamic market's investment appetite.
In his opening remarks, Peter Pang, Deputy Chief Executive of the HKMA, said: "With the tax framework for sukuk in place, Hong Kong's financial platform is ready for sukuk issuance. We highly welcome local and overseas entities to make use of Hong Kong's platform to issue sukuk."

He confirmed that, "to play a lead-off role for this market, we are working closely with the Hong Kong Government to prepare for the inaugural issuance of Government sukuk under the Government Bond Program and, thereby, promote the further development of the sukuk market in Hong Kong. We very much appreciate the close partnership we have established with Malaysia in developing Islamic finance and look forward to more co-operation opportunities in the future."

Muhammad Ibrahim, BNM's Deputy Governor, added that "this inaugural conference is set to mark a significant step to enhance collaboration and deepen financial linkages in Islamic finance between Malaysia and Hong Kong. We look forward to sharing our Islamic finance marketplace with Hong Kong in terms of expertise in structuring, managing and distributing sukuk, as well as providing advice on legal and Shariah matters."

He emphasized the importance of adopting international standards and best practices in new markets, with a proper governance framework to facilitate the execution of transactions and instill investors' confidence in the industry. Potential areas of collaboration between Hong Kong and Malaysia will therefore include the dual listing of sukuk, leveraging on Malaysia's Shariah governance framework and arbitration platform.

The conference followed the first meeting of the private-sector led Joint Forum on Islamic Finance between Hong Kong and Malaysia held in December 2013. Its next meeting will be held in Kuala Lumpur in the second half of this year.

Hong Kong's tax framework for sukuk, compared with conventional bonds, went into operation in July 2013. Amendments have given tax and stamp duty relief for transactions underpinning the structure of sukuk products, which cannot involve the payment or receipt of interest, and might, otherwise, attract additional profits or property tax exposures, or stamp duty charges.

It has not been intended that Hong Kong should confer special tax favors on sukuk, but that financial instruments of similar economic substance should be afforded similar tax treatment. On the other hand, Malaysia, which has established itself as the major Islamic financial hub in the region, has gone beyond the provision of a level playing field, and has established tax exemptions for income derived from Islamic financial products and structures.

(Global Tax News / 15 April 2014)
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