Mushtak Parker Saudi Gazette LONDON – Despite the tough market conditions in global banking as a result of the continuing impact of the financial crisis and the eurozone sovereign debt crisis, London remains a major attraction as the premier financial center in the world. The two latest banks to enter the UK market with a statement of intent are the Oasis Group of South Africa and Abu Dhabi Islamic Bank (ADIB). The former, which has funds under management of R35 billion and which is one of the largest Islamic asset management firms in the world, last week concluded a serious of events in London to mark the opening of its UK operation, Oasis Crescent Uk Limited, which is regulated by the Financial Services Authority (FSA). The latter started operations at its London subsidiary in June 2012, making it the first UAE-based Islamic bank to be licensed by the FSA. Both have opted for iconic locations, albeit London can be an expensive location to operate from. The Oasis office is located in Hans Crescent smack opposite Harrods, arguably the most famous department store in the world, which is owned by the Qataris. ADIB on the other hand is situated a stone's throw away from Harrods at Number One Hyde Park, the classic new (or some would say depressing) glass edifice bordering Hyde Park in Knightsbridge, which is also owned by the Qataris and where the top apartments will set you back a mere £40 million each. According to Adam Ebrahim, CEO of the Oasis Group, which already has an established fund management company in Dublin which is regulated by the Central Bank of Ireland, the reasons for entering the UK market are indeed compelling. London remains a world class, regulated, transparent and investor-friendly financial market. In the Islamic finance and investment space, he sees a major opportunity in the UK, which has a total population of 63 million, of which just under two million are Muslim. However, the UK also gets an additional two to three million transitional Muslim population in terms of tourists or those owning properties or studying in the country. While the total UK investment management industry boasts funds under management of a staggering £4.4 trillion, Adam Ebrahim projects that the potential Islamic investment market size in the UK to be up to £140 billion. This he reckons is "an emerging growth opportunity" because there is a "lack of (Islamic investment) products on offer" with "opportunities in the pension and savings market". It is a stated policy of successive UK governments, including the current coalition government of Prime Minister David Cameron, to develop London into a major international Islamic trade, investment and finance centre. Not surprisingly, successive UK governments over the last few years have introduced enabling legislation to facilitate the introduction of Islamic financial products including murabaha, ijara, sukuk and others into the UK market under financial inclusion policies. Lord Sheikh of Cornhill, who is also the Vice Chairman of the Associate Group of British Parliamentarians on Islamic banking and who gave the keynote address at the two main receptions of the Oasis launch, commended Oasis and the Ebrahim family - Adam and his two brothers Shaheen (the chairman) and Nazeem (the vice chairman), for building up the group from a small operation launched in Cape Town in June 1997 to a major asset management firm with operations and registrations in South Africa, Ireland, Malaysia, Singapore and now in the UK. He emphasised the growing importance of Islamic finance which today is a global industry worth an estimated $1.5 trillion and growing between 20 to 40 percent per annum. "Islamic finance is the world's fastest-growing financial sector. Here in the UK we were the first European country to promote and encourage retail Islamic banking and are now the leading centre for Islamic finance outside of the Gulf countries and Malaysia. We no have Shariah-compliant assets in excess of $18 billion," he added. The financial and cultural growth of the Islamic finance sector in recent years, and its acceptance into Western society, maintained Lord Sheikh, "is a testament to ho its principles resonate with the change in modern attitudes to financial practices. It is about the ethics with which we manage our finances, it is about investing in what is good for society and the environment as well as economics. We want financial arrangements to be made with social responsibility at heart. Ultimately, I think we need to be working towards the further expansion of Islamic financial products across the world. The appeal of this sector, irrespective of religion, should be celebrated and used to help propel Islamic finance into the mainstream market," he said. In some respects this is exactly what groups such as Oasis and ADIB are trying to do. Adam Ebrahim is adamant that equities as an asset class remains an inflation beating asset, provided that the risk is managed accordingly. To him it is a question of mitigating volatility (the declining risk to the investor over the long term) against inflation, which he calls "the cancer of one's wealth". If not managed properly, inflation can have a devastating impact on the real value of money and investment today compared with a period of time say 10, 20 or 50 years ago, especially in terms of purchasing power or money. "Equities," he maintains, "have delivered inflation beating returns over the long term. In a 'low return' world, equities are offering best relative value over the next decade." Oasis prides itself in its performance to date and its strict adherence to ethical and Shariah principles. The Group's flagship Islamic fund - the Oasis Global Equity Fund, according to Adam Ebrahim, is the world's best performing fund, giving an annualised return from inception (December 2000) to March 2012 of 8.4 percent (gross of fees) compared to the average Shariah Peer Group of minus 1.1 percent; UK CPI of 2.4 percent and UK Money Market Yields of 3.5 percent. This fund has outperformed the MSCI World (GBP) Index in all the risk ratios including Sortino and Sharpe Ratios in both bull and bear months for the above period. The Oasis Shariah Board includes three of the most prominent Shariah scholars in the global Islamic finance industry, including Sheikh Nizam Yaquby of Bahrain, Dr. Daud Bakar of Malaysia and Sheikh Yusuf Talal De Lorenzo of the US. In the meantime, ADIB (UK) was launched by Sheikh Khalid bin Zayed Al Nahyan and the Duke of York, Prince Andrew, who is also the UK Trade Ambassador, in the presence of Abdulrahman Al-Mutaiwee, the UAE Ambassador to the UK, and Trad Al-Mahmoud, CEO of ADIB Group at a ceremony to mark the occasion. The bank will offer a range of Shariah-compliant services to business and private clients. "This launch signifies the merging of our Islamic financial values with the advanced financial infrastructure and eco-system of the UK. Besides demonstrating the bank's commit-ment to reach out to its customers wherever they are, ADIB London will contribute to the development of the Islamic finance industry in the UK," emphasised Al-Mahmoud at the launch.
