FORERUNNER FOR SUKUK

Oman 2014 | FINANCE | INTERVIEW

TBY talks to Abdul Samad Al Maskari, CEO of Al Madina Financial & Investment Services, on the firm's investment portfolio, sukuk, and raising awareness of Islamic finance.

Abdul Samad Al Maskari
BIOGRAPHY
Abdul Samad Al Maskari holds a degree in Commerce from Ein Shams University in Egypt, and is a Chartered Islamic Finance Professional (CIFP). Prior to joining Al Madina, he was an External Auditor at Ernst & Young. He joined his current firm in 1999 and became CEO in 2008.

How has Al Madina Financial & Investment Services developed?

Al Madina was founded in 1998 as a purely investment company. We used to invest worldwide, in the US and Asia, until September 11, 2001. We then decided to concentrate on the region, and build a real investment-banking house. By building the company from 2001 until today, we have managed to structure and promote private equity companies, real estate funds, and lately structured the first Islamic sukuk in Oman. In 2005, we structured and promoted Al Madina Real Estate as the first publically closed dedicated real estate development company in Oman. There were development companies here before, but they were all family businesses. In 2006, we founded Al Madina Insurance, as well as a logistics company and a hotel. Since 2005, we have promoted more than $250 million worth of investment in the market, locally and in the region. The range of investors in the companies we have promoted varies from institutional/government to private sector entities from Oman and the region. Right now, we are concentrating on different sectors. One of the sectors we are looking at is education and health. In 2012, we signed a joint venture with a Canadian offshore company to start an education company. The Canadian system is one of the top-10 placed education systems in the world. Al Madina is the first and only company right now that has come up with a real estate fund listed on the market, which matured in 2012. We managed to generate 126% IRR for our clients and unit holders. We promised that we would generate 16% IRR, and we managed to raise 21% every year.

How would you characterize your investment portfolio?

It is a well-balanced portfolio. We have managed to develop a mixed portfolio in different markets and in different sectors. We did not concentrate only on the equity market, but also structured private equity companies and invested in them as a partner with the other shareholders. Our fundamental philosophy is to be in a long-term relationship with our partners to build companies that will add value to the real economy.

What do you make of the potential for sukuk issuances in Oman's capital markets?

In November 2012, we were awarded a mandate to structure the first Omani sukuk. It was an OMR50 million sukuk with a five-year holding period, a coupon rate of 5%, and a BBB+ rating. The sukuk is structured as an ijara sukuk. We recently received sharia advisory approval for the structure. I think sukuk, as a new instrument, will add value and depth to the capital markets. If you look at Islamic banking and the window, you'll see equity of OMR550 million. That needs to be deployed, and you are looking at more than OMR5 billion. Many instruments need to be developed, and sukuk is one such example.

Do you feel enough is being done to increase awareness of Islamic finance?

Efforts need to go further to increase awareness. What has been done is sufficient for the meantime; however, more needs to be done. We are a Muslim country and people are hungry and keen to learn more. I know some newspapers have a plan to run a three-month educational plan for the public. Any awareness campaign that institutions get involved in should not be used to market products. It should be a collective effort to take awareness to the people to build the knowledge base of Islamic finance. The market is huge.

What are the defining trends on the Muscat Securities Market (MSM)?

The problem for the MSM is liquidity, and as members of the industry it is part of our responsibility to come up with ideas and innovations to create liquidity for the market. We understand all the companies, so we need to find ways and means to come up with the real assets and get depth into the market.