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Mutual Fund

30-TRE-167-LA FRANCAISE.pdf - Adobe Reader

A shari’a real estate fund in Paris, courtesy of an anonymous Kuwaiti bank, has all the trappings of a queer yet interesting partnership in a market with fair potential.

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July 13, 2012 4:30 by



     Since the party, with its roots in the region, has chosen to remain unidentified, it was time to quiz Marc Bertrand, CEO of La Française Real Estate Managers. The most obvious questions were: With which Kuwaiti bank have you partnered? Can we talk to them? The answer was not a surprise at all: “No, the investor wishes to remain anonymous.”What is the cor­pus of the fund? Answer: “The OPCI is a dedicated fund. The real estate invest­ment was financed through 50 percent eq­uity and 50 percent Murabaha loan.”

“The OPCI, given its structure, gov­ernance and tax efficiency, was quickly identified as the optimum structure for the lodging of the co-investment and the shari’a board of the Kuwaiti bank, co-in­vestor, certified the shari’a-compliance of the structure, asset and the tenant,” Bertrand quips.

According to Bertrand, the shari’a finance market is rapidly developing in France with experienced shari’a profes­sionals, including banks, asset manag­ers, notaries and lawyers. “The market is favorable to shari’a structures given that the French administration has integrated shari’a compliant loans into its doctrine. Tax policy of shari’a structures is now identical to that of comparable tradi­tional loans. For example, Ijara loans are comparable to the French crédit bail (lease and buy),” he says. The market is certainly ripe and the situation tailor-made for money to flow from the Gulf.

As an investment, the French mar­ket, especially the Paris region, offers quality and diversity, as well as an at­tractive risk return profile. According to Bertrand, the market is also developing within continental Europe. Historically, the UK market has attracted more for­eign investors, including Islamic in­vestors, he says. La Française appears well-positioned to reap the benefits. To position the company in the context of its international ambitions, UFG-LFP (asset management group resulting from the merger of Union Française de Ges­tion and La Française des Placements) was re-branded La Française AM in Sep­tember 2011.

Interestingly for Bertrand, the real estate funds managed by La Française AM have little debt and are hence insu­lated from the European debt crisis. In fact, it has been an opportunity worth grabbing. “We are in a more comfortable position that offers our investors bet­ter perspectives and lower volatility. La Française AM is seizing the opportunity provided by current market conditions to launch a commercial real estate debt fund, reserved for institutional inves­tors,” he says.

The crisis may have renewed partner­ships such as these, but Bertrand says Mid­dle Eastern businesses have been interested and present on the French real estate market for roughly 15 years. They are particularly interested in prime Parisian office real es­tate. “Fuelled by petroleum dollars, Mid­dle Eastern investors are pouring into the French real estate market in greater number. Simultaneously, other foreign investors, mainly German and Spanish, are pulling out. The end effect being a larger proportion of Middle Eastern investors,” says Bertrand.

Needless to add, the La Française fund appears to be a response to this stimulus. The firm seeks to capitalize on this and offer similar asset and investment management services to other Islamic investors. Accord­ing to Bertrand, La Française AM is actively prospecting in the Middle East a limited and select number of investors with whom the company can commit to long-term partner­ships. “La Française AM’s shari’a expertise is a key factor in its future development in the Middle East,” he says.

-By E. Shahid

*First published on Trends



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