Genghis Capital to Launch Shariah Unit Trust

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VENTURES AFRICA – Genghis Capital stockbrokers are to launch the Kenyan market’s second Shariah-compliant unit trust next month, joining FCB Capital in the battle for the Muslim investment market.

The investment arm of Chase Bank joins FCB, the investment banking department of First Community Bank, in launching a Shariah-compliant trust, with FCB’s offering set up in April last year.

The new unit trust, called the Iman Fund, is aimed at Kenyan investors focused on “socially responsible ventures”, Adnan Ganiwalla, the Genghis Capital unit trust consultant, told Business Daily.

He said these investors had previously had limited options as their religious beliefs forbid most other options, as Islam forbids the earning of interest, ruling out interest bearing bonds and savings accounts for Muslims.

“The Muslim population in Kenya is 11 percent and many are either investing in property or putting money in accounts that do not earn interest,” Ganiwalla said.

Former Capital Markets Authority chief executive Stella Kilonzo has said that Islamic finance has huge potential: “As an Authority we are keen to promote new capital markets products which will help us to expand into growth areas such as Islamic capital market products.”

He said the heating up of the top-end property market had narrowed investment opportunities in real estate. Other investments barred by Sharia law include in companies such as insurers, non-Shariah compliant banks, alcohol, pork, defence, gambling and entertainment companies and retailers with large alcohol sales.

20 of the 56 companies listed on the Nairobi Securities Exchange (NSE) would be considered Sharia-compliant, mostly agriculture and energy companies.

Ganiwalla said that Genghis would use Shariah guidelines from the likes of Ideal Ratings and the Dow Jones Islamic Market Index in order to pick investment options. Chase Bank’s Islamic division, the Chase Bank Iman’s Shariah board, will be the fund’s regulators.

“They will meet every quarter and after every corporate action to see of if companies are Shariah complaint,” said Ganiwalla. Companies will also be judged on the amount of debt they hold.

Investments in the Iman Fund, which will also look to invest in equity, domestic and offshore interests, can be as low as 500 Kenyan Shillings ($5.78), with Ganiwalla saying this low entry level was based on research that show investees are limited by lack of funds.