After a six-year hiatus following the launch of its first and only Islamic fund, Azimut is planning to roll out two Shariah compliant equity funds in 2019 as the Italy-based asset manager plans to grow its Islamic segment. MARC ROUSSOT has the story.
Targeting to multiply by fivefold its US$200 million-worth of Islamic assets under management to reach US$1 billion by 2023, Azimut will offer two new Islamic equity funds in 2019 domiciled in the UAE and Luxembourg, developing its portfolio of Islamic investment products comprising only one Sukuk fund launched back in 2013.
The Milan-headquartered asset management company will start by tapping Pakistan’s Islamic equity market with an open-ended fund to be incepted during the first quarter of 2019 and domiciled in the Dubai International Financial Centre (DIFC), which is home to only four public funds.
“We have chosen the DIFC because we have an office there so we already have a license, but more importantly, we believe that the DIFC has become an acceptable jurisdiction for fund domiciliation even for international investors. To date, no global player has decided to tap the DIFC, hence, this is a very strong message for those looking for alternative domiciliation,” shares Giorgio Medda, the head of MENA and Turkey at Azimut.
The fund will primarily be offered to the UAE retail market, but in a second phase, it will be distributed in other jurisdictions. To increase the level of penetration, Azimut intends to sign a strategic distribution agreement with a UAE Islamic bank. Overall, the fund’s net asset value is expected to be reaching US$25-50 million after 12-18 months of activity.
With Bank Alfalah as the advisor, the asset manager, which will be adopting a plain vanilla approach, investing in industrial, retail, consumer and construction companies that are part of the Pakistan Stock Exchange, is targeting at least a 15% yield per year in the long term (five to 10 years).
“Out of all emerging markets, Pakistan presents better opportunities for global investors as it has strong fundamentals in terms of demographics and [the] macro structure of the economy, for instance. In comparison to other comparable markets, Pakistan also has [a] significant level of liquidity,” says Medda.
Once up and running, the Pakistan-focused fund will be followed by a global equity Islamic vehicle with a dividend payment strategy. Planned for the second half of 2019, the exact features have yet to be decided and talks are ongoing with distribution partners to thoroughly assess interest for such an investment product but the fund, to be domiciled in the Grand Duchy, is likely to be invested in companies with high profitability in their own businesses, coupled with good shareholder return.
“Azimut has a serious commitment to develop its Middle Eastern presence and we have the ambition to grow our Islamic franchise,” concludes Medda.