CORECAP, a specialist alternative asset advisor based in Qatar, has launched its debut Islamic private equity fund, which will be the first to offer a Shariah compliant mezzanine structure.
CORECAP said that it would raise $150 million (€111 million) for CORECAP Islamic Private Equity Fund I, the first of a family of funds it plans to raise to invest in Shariah-compliant businesses in the Middle East and North Africa. Speaking at the Qatar Economic Forum, CORECAP said the fund will acquire majority stakes in “stable and mature businesses” through a range of financing structures.
The fund will be the first of its kind to provide companies with Shariah compliant funding through both equity participation and a mezzanine structure. Shariah law forbids some of the standard features of typical private equity deals, including the charging of interest on debt.
The firm said CIPEF I would be a closed-ended six year fund, targeting an internal rate of return of 25 percent. Potential investors will be asked to contribute a minimum of $3 million. It will be governed by an independent board of “prominent Shariah Scholars from the region”, which will be chaired by Qatar’s former Minister of Economy & Commerce, Sheikh Mohamed Bin Jassem Al Thani.
According to CORECAP, the global Islamic Finance industry is now valued at about $800 billion, and is growing by an estimated 15-20 percent per annum. The firm believes that Islamic Private Equity will outgrow conventional private equity in the MENA region within the next 5 years, by which time it could be worth over $40 billion.
Chief executive Khaled Hassan Rashed said: “The launch of CIPEF I stems from our belief that Islamic Private Equity is one of the most suitable answers to the ever increasing demand for structured Shariah compliant investments”.