Dubai Multi Commodities Centre (DMCC) is planning to set up an investment firm to develop investment products on the regional commodities market.
The new company, Dubai Commodity Asset Management (Dcam), will form a joint venture with US-based advisory company Shariah Capital to develop and manage a range of Shariah-compliant investment products, said the DMCC statement.
The new joint venture, Dubai Shariah Asset Management (Dsam), will be 51 per cent owned by Dcam and 49 per cent by Shariah Capital.
Ahmed bin Sulayem, DMCC Executive Chairman, said the initial capital will be $25 million (Dh91.5m).
DMCC purchased 4.99 per cent of Shariah Capital as part of the agreement.
The DMCC paid $ 5.5m for around 3.08m stocks of Shariah Capital at a rate of $1.8 per stock.
Bin Sulayem said the Dcam and Dsam would serve as vehicles offering the region’s first commodity-linked Shariah compliant investment products.
“We believe such products will be of great interest to institutions and high-net wealth investors who are looking beyond traditional investment areas.”
David Rutledge, CEO of DMCC, said the launch of DCAM and DSAM aims to provide physical, financial and market infrastructure for building commodities marketplace in the region.
“There is massive growth in Shariah-compliant asset management funds and total global assets in Islamic equity funds have reached $18bn.
“The market is expected to grow rapidly and DSAM offers high potentials for different commodities-based asset management products in the region,” he said.
Rutledge said Dcam would be getting a licence from the UAE’s Central Bank, while there are several options for the registration of Dsam; one of them is registering the new joint venture company at the Dubai International Financial Centre.
Eric Meyer, CEO of Shariah Capital, said that Shariah Capital is publicly traded on the Alternative Investment Market of the London Stock Exchange.
“We have a Shariah Supervisory Board that supervise the implementation of Shariah rules in all funds managed by the company.”
He said Dsam would bring in high rank fund managers around the world to introduce Shariah-compliant equivalents for clients in the GCC and the Middle East.
“Dsam will offer innovative products in alternative investment funds, funds of funds, and private equity. Fund managers will arrange, under directives from the advisory board, Shariah-compliant funds similar to the most successful funds trading in commodities in global markets. Shariah-compliant market is growing very fast, not only in the Middle East, but also in Western and Asian countries and this creates high opportunities for the market.”
Assets under management by Dsam will surge to billions of dollars, similar to global conventional asset management companies, he said.