Thrust for global zakat fund initiatives

Saturday May 9, 2009
Thrust for global zakat fund initiatives
By CECILIA KOK


BMB Group Ltd is not a particularly familiar name to many of us. Although the Cayman Islands-based company is a prestigious asset management and financial services provider with a global presence, it has not been very visible since its establishment in 2004.

The reason is the company serves mainly a very discreet group of clientele, providing an Islamic investment platform to some of the most significant ruling families, sovereign wealth institutions, ultra-high net worth individuals and institutions from the Islamic world. The company could almost be likened to an “exclusive club” for the super elite group.

Nevertheless, BMB Group’s presence in Malaysia is increasingly being felt since it forged a partnership with the International Zakat Organisation (IZO) in February this year to establish and co-manage a global zakat and charity fund. The IZO is a key charitable body of the Organisation of the Islamic Conference (OIC), which will oversee the management of the fund by BMB Group.

As part of the initiative, BMB Group will be setting up an Islamic asset management company in Malaysia, and that will be launched in August.

Dr Humayon Dar, the chief executive officer of one of the group’s subsidiaries, BMB Islamic, told StarBizWeek in a recent interview that the launching date is to coincide with Ramadhan to add more meaning to the global zakat and charity fund initiative. This is because Ramadhan, which marks the fasting month for Muslims, is when believers normally pay their tithes.

The medium-term target size for the global zakat and charity fund is US$3bil. But for the first closing, which is expected to be 12 months after the launch of the fund, BMB aims to raise up to US$750mil for the fund.

According to Dar, the funds will be collected from Muslim sources in different parts of the world, including Malaysia, both on the government and private sector levels. And the group will manage the fund on behalf of the targeted beneficiaries.

The fund will invest in four sectors within the 57 country members of the OIC. Of these sectors, three concern investment activities and one is for contributions towards emergency and relief.

Dar reveals that the fund’s investment activities will focus on global equities that are syariah-compliant, income-generating activities for the beneficiaries of the zakat money in the form of microfinance and private equities, as well as the development of social enterprises relating to health, education and housing. But the basic objective of the fund is still capital preservation.

“When you attempt to preserve capital, you cannot be aiming for very high returns,” Dar says, nevertheless, expressing confidence that the group could generate commendable returns from its investment activities.

BMB Group is eyeing for a rate of return of between 15% and 20%. The returns on its investment, Dar explains, will be channelled towards the fund’s fourth function, that is, emergency and relief.

On how the company quantifies the social benefits of the global zakat and charity fund initiative, Dar says the company is aiming for a social return rate in the range of 50% to 75% back to the community.

BMB Group has embarked on an acquisition trail since the end of last year when it bought US private equity firm EMP Group, which is focused on investing in emerging markets.

According to Dar, BMB Group is considering several other options and it is open to acquiring other quality assets that are available at the right prices.

“Being cash rich enables us to do that,” he says, adding that the company is also planning to set up a private equity platform for the region.