UK and Russia get their first sukuks ready while Maldives welcomes its first Islamic Bank

The United Kingdom finally saw the dawn of its own Sukuk or Islamic bond for the first time in the history of its capital markets. The firm, International Innovative Technologies (IIT), that has taken this commendable step in these tough times is a manufacturer of industrial milling machines.

The sukuk industry has been hit hard in the recent times due to the turbulence in the underlying asset markets such as the real estate price fluctuations, hence, shifting the preference of a majority of market investors towards more liquid and conventional investments.

According to the latest news reports, the legal representative of International Innovative Technologies, Norton Rose said that the money raised through sukuks is $10 million. The firm was dealing with an investor who insisted to invest money strictly within the shariah-compliant boundaries.

Raising money through the sukuk way shows the optimistic attitude in firms and people of UK towards the future of Islamic bonds in the kingdom and has received positive reactions from both the Government as well as private sector peers.

The investor in International Innovative Technologies is none other than the Dubai-based private equity firm, Millennium Private Equity. The sukuk structure is a musharaka one as it suits the business dealing between the two firms perfectly. The sukuk has been reported to have a rate of return of 10% per year and would expire in the year 2014.

The International Innovative Technologies spokesperson also mentioned to the news media that the money raised through this way would be used for the development of their new products.

In Russia, the state-owned bank, VTB Bank is making some serious efforts to enable the growth and development of Islamic finance industry. After opening a VTB Capital branch in Dubai, VTB Bank is working towards other Shariah-compliant business investments.

One of these investments includes the formation of an infrastructure fund with a Kuwait based firm, Fouad Alghanim & Sons. The second one is a Shariah-compliant investment in the Russian real estate market with the Sultan of Oman’s State General Reserve Fund.

Even though it seems that the cultural environment of Russia would take some time to absorb the concept of Islamic banking and finance fully, there are 20 million Muslims in Russia that would welcome these efforts with open arms.

According to the news reports, VTB Bank has plans to release Sukuks worth $200 million later this year. The spokesperson of VTB Capital, Andrei Kochkin confirmed that VTB would raise money in the Shariah-compliant way in addition to their already existing conventional ways. The VTB bank plans to release both the euro bonds as well as the Islamic bonds or sukuks.

In the meanwhile, the Maldives Monetary Authority (MMA) took up its first steps towards the establishment of the first Islamic bank in Maldives. Maldives Islamic Bank Pvt. Ltd, the first of its kind in the country has been formed in collaboration with Islamic Corporation for the Development of Private Sector (ICD).

Recently, a banking license was issued to the Maldives Islamic Bank Pvt. Ltd. which gave the legal right to the bank to carry out its operations from August 2, 2010.

The drafting of separate regulations of the Islamic banking activities is still under process and the bank is expected to be set up completely by the year 2011.

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