Enviro investment movement goes Shariah-compliant
The Green movement is going Shariah… What we do not understand from the passage below is how perfume manufacturing can possibly be Shariah-compliant. Nevertheless, it does seem that the environmental movement has thrown in with the financial jihad…
Forestry fund managers apply Sharia for Middle East edge
Two fund managers are marketing Sharia-compliant sustainable forestry funds to tap Middle Eastern investment. Sustainable Capital S.A., Luxembourg will open its Sustainable Resources Fund to investment from 23 July, while Treedom Investments Limited (TIL) is to open its Asia Renewable Resources Fund (ARRF) to investors on 1 July. “We believe that a significant percentage of potential investors are in the Middle East,” said Sustainable Capital’s Michael Young, although the firm is also targeting investors in the UK, mainland Europe and Asia.
The fund – which is targeting annual returns of 15%, net of fees – will combine investments in high-margin growth projects in Africa and Asia with more mature, cash-generating projects in North America and Europe.
Young aims to raise $100 million into the Luxemburg-registered SICAV fund over the next three years, but has an immediate goal of raising $10 million within three months to enable investment in its first project.
“Our distribution model is to raise money month in and month out,” allowing the firm’s project team to develop one project each quarter. “By the end of year three, we’ll have a fully diversified fund.”
Meanwhile, TIL is also targeting at least $100 million, and Andrew Steel, its Bangkok-based CEO, reports “a very strong response from the Middle East”. The fund – also a SICAV – is targeting 12% per year, with a recommended five-year minimum investment.
It will invest initially in existing plantations in Thailand, Laos and Cambodia, seeking revenues from timber, bamboo, oil seeds, essential oils such as oud and sandalwood, and carbon credits.
Steel says that the value of oud oil – which has the same retail price, by weight, as gold – is well-understood in the Middle East, and some 50% of the fund’s revenues will be derived from the product. “Perfume manufacturers … can’t get sustainable supplies” of the essential oil, and the ARRF will apply high environmental standards to its investments, he said.
“We are in the process of making the fund Sharia compliant,” he added, to allow Islamic investors to participate. One route would be to issue a $100 million Sukuk bond – structured to avoid interest payments, which are forbidden under Sharia law – which would invest in the fund.