This Is Guernsey

By Tom Edwards

THE first Guernsey-domiciled sharia-compliant fund investing in the United Arab Emirates is listing on the Channel Islands Stock Exchange next month.

British-owned but Dubai-based international property-development company the First Group will be promoting its Emirates Opportunities Fund, which will focus on the Northern Emirates and its undersupply of housing and the population boom.

Working with Louvre Fund Management, law firm Collas Day acted as legal adviser and sponsor to the fund for its listing. Partner Jason Romer (pictured) said it was an extremely exciting project.

‘There aren’t too many of these types of listing at the moment, so it will be interesting to see how the market continues to develop. We’re seeing an increase in the funds from emerging markets such as the UAE, Brazil and India. We worked hard with Kevin Gilligan, of Louvre, to bring this fund to Guernsey and we were able to do it because of the excellent reputation of the island’s regulatory environment and the CISX itself.’

The First Group wants to raise $100m. from investors, with a minimum individual requirement of $25K.

To be compliant with sharia law, payment and receipt of interest are forbidden, as is profiting from investment in certain activities such as gambling or alcohol.

Collas Day senior associate Paul Wilkes said the process of ensuring that the fund was sharia compliant had been fascinating.

‘We worked with a sharia compliance adviser and it was interesting to note that in some areas of law, concepts were very similar and for others we had to put our heads together to make sure that the approach was one we were both comfortable with.

‘For them, the protected cell company structure was unfamiliar, so was a focus of a lot of our attention. However, the advantages of a PCC were clear and a substantial incentive as long as the structure was demonstrably sharia-compliant.

‘It provides the infrastructure to launch new funds without having to start from scratch each time.

‘We’ve effectively created the first cell within the PCC structure so that there’s flexibility for further investment in different asset classes.’

Louvre Fund Management will act as administrator when it is listed.

Mr Gilligan, who is a director, said dealing with both sharia-compliant law and the new Guernsey companies law had been an interesting exercise.

‘The main focus for investors will be the Middle East, which is why we established it as sharia-compliant.

‘I’ve also been in London meeting with journalists and private bankers as there’s not enough of this type of product available to UK investors.

‘More people are looking for alternative Middle Eastern investments which are not so linked to the credit crunch.’

The First Group was established in Dubai in 2005 by Danny Lubert and Gary Shepherd, who together have more than 40 years of experience and global property sales of $2bn.

Commercial director David Scott said the fund’s domicile in Guernsey coupled with the UAE’s booming property markets would encourage direct investment or a zero-tax solution for investors.

‘The population boom and the influx of international businesses into Dubai and the Northern Emirates are contributing to an undersupply of residential housing in the whole region.

‘One of the strategies of the fund is land banking and development especially in the Northern Emirates. There are many reasons why attention could turn to the Northern Emirates due to their nature as real emerging markets with almost identical fundamentals as Dubai.’

Article posted on 24th July, 2008 - 2.30pm