Qatar Islamic Bank eyes UK mid-cap investment spree

Qatar Islamic Bank eyes UK mid-cap investment spree

Qatar Islamic Bank sees opportunities in manufacturing, services.

October 26, 2010 8:57 by Reuters

The UK unit of Qatar Islamic Bank (QIB) has unveiled a new lending strategy targeting small to medium-sized British companies with limited access to conventional sources of credit, the company said.

“We are seeing quite a big opportunity in the UK for good, solid credit, which is being ignored by traditional banking and capital sources, and our strategy is to pursue those transactions,” its Head of Corporate Finance Akbar Ahsan told Reuters on Monday.

QIB (UK) is focusing on profitable companies whose products are in line with Islamic tenets.

UK companies have struggled to secure bank lending since the financial crisis struck in 2008, prompting concerns that the economic recovery may be derailed.

Ahsan declined to give details on the potential size of QIB’s prospective lending programme.

Data released last week by the Bank of England revealed that lending to firms picked up in August for the first time in six months, although preliminary September data suggested the improvement was short-lived.

QIB, which used to be known as European Finance House until August, was interested in companies with a value of up to 150 million pounds ($235.4 million), Ahsan said. He sees special opportunities in manufacturing and services but is looking at all sectors compliant with Islam, which forbids industries such as alcohol, pork, pornography, weapons, and companies charging interest or taking excessive risks.

“The UK is our first priority but Europe will eventually be on the radar,” he said. “The pipeline is pretty full. I am hoping there will be further announcements shortly.”

Ahsan was behind a recent transaction which saw QIB (UK) teaming with Barclays Ventures to invest in UK cosmetic manufacturer B3 International, which was seeking fresh capital to cope with a bigger than expected order book.

QIB’s investment is aimed at helping the company buy raw materials to meet its order book commitments.

“The business is in an upward trajectory. Their problem is that they have too many orders; in the current environment you are not going to find many companies with the same issue,” Ahsan said.

QIB (UK) has also formed a partnership with alternative asset manager Eden Rock Capital Management to lend to UK companies in the Eden Rock Direct Lending Fund, which includes global companies.

Ahsan declined to say how much the company has pledged to these projects but a separate source close to the Eden deal told Reuters that QIB (UK) would invest up to 50 million pounds in the next two years.

QIB (UK), is majority owned by Islamic lender Qatar Islamic Bank. Other shareholders include its own management and other Qatari investors.

(Editing by Sinead Cruise, Sharon Lindores)