Bahrain’s Ithmaar, partners, launch LatAm fund

Wed May 21, 2008 7:04pm IST

MANAMA, May 21 (Reuters) – Bahraini Islamic lender Ithmaar Bank ITHMR.BH and two other regional firms launched a $500 million property fund to invest in Latin America on Wednesday, in a move to diversify investments away from the Middle East.

Ithmaar on Monday also announced a $1 billion energy fund it was launching with the Kazakh government.

Flush with cash from a six-fold increase in oil prices since 2002, Islamic lenders and other Gulf banks are increasingly searching for investment opportunities outside their crowded home markets.

“We’re all in the Middle East and North Africa region, but not Latin America,” Ithmaar Bank Chairman Khalid Abdulla-Janahi told reporters in the Bahraini capital Manama. “You’ve got to diversify your investments … you can’t have them all in one place.”

Ithmaar Development Company, a division of Ithmaar Bank, Kuwait’s Safat Investment Co (SAFT.KW: Quote, Profile, Research) and Bahrain’s Arabian Ventures said the fund would target a minimum return of 20 percent over an initial term of five years.

The fund’s creators all cited growing political and economic stability in Latin America, which they predicted would continue despite housing-related U.S. credit woes nearby.

“Many countries in Latin America have benefited greatly from a commodity boom … It has a characteristically young population … further contributing to the surge in housing and real estate developments,” the fund’s creators said.

Islamic lenders in particular covet real estate investment opportunities, as Islam bans interest and returns must be based on physical assets. Rent from property portfolios is a common form of return paid to Islamic investors.


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