BNP Paribas offers Islamic private placement fund

BNP Paribas Investment launched an Islamic umbrella fund for investing in sukuk and murabaha.

The recently launched Sharia-compliant private placement fund aims to outperform US dollar 3 Month Libor by 100 basis points, net of fees, over the recommended minimum investment horizon by investing in high quality sukuk.

Sukuks are  fixed income instruments, in US dollar and non-US dollar currencies. The US dollar-denominated murabaha is a contract based on sales of assets at a price which includes a cost price and a mark-up, both stated at the time of sale, as agreed by both parties. The sale is immediate even if the payment is deferred.

The sukuk and murabaha structures will be mainly issued in Gulf Cooperation Council countries by corporations and governments. The management of this new fund is delegated to Fischer Francis Trees & Watts, the Global Fixed Income specialist of BNPP IP.

"We are convinced that Islamic investors, although they continue to focus on equities, will benefit from diversification and will turn to other strategies, such as the ones used in this fund. We are keen to develop our Islamic offering and to expand our distribution of these products globally, especially in the Middle East and in South East Asia where we have already seen strong interest," said Tariq Al-Samahiji, CEO of BNPP IP - Middle East.