Labuan IBFC is pleased to welcome Amanah Raya’s Harameen Fund, a US denominated Islamic closed-end private fund with an initial target size of USD25 million, established through a Labuan-based special purpose vehicle (SPV), named Al-Harameen (Labuan) Limited.

The Al-Harameen Fund aims to achieve returns mainly through investments in securities of entities that focus on income generating hotels in Makkah and has an investment horizon of 10 years. The fund is expected to generate long-term capital appreciation for investors as it provides a rare opportunity to enter the property market in Makkah and/or Madinah, both key cities in the Kingdom of Saudi Arabia.

Malaysia's AmanahRaya Investment Bank (Labuan) Ltd (ARIB), a wholly-owned subsidiary of Amanah Raya Berhad, has teamed up with Capital Partners Holdings (Bahrain) (CPH) to launch the Al-Harameen Fund.

The launch took place on 3 May 2010 in Manama in the presence of Dr. Nezar Al-Baharnah, the Bahraini Minister of State for Foreign Affairs; Dr. Mahathir Mohamed, former Prime Minister of Malaysia; Mohd Razif Abd Kadir, BNM Deputy Governor, and several other dignitaries from Bahrain and Malaysia.

Arshad Ayub, Chairman of ARIB, stressed that Makkah has much potential as an "Islamic investment destination" and the Al-Harameen Fund uniquely focuses on the hospitality industry targeted to income-generating hotels and service apartments in Makkah, Islam's holiest city where the Hajj pilgrimage converges annually. The fund is an Islamic closed-end private fund denominated in US Dollar with an initial target size of USD25 million, established through a Labuan-based special purpose vehicle (SPV), Al-Harameen (Labuan) Limited. The Al-Harameen Fund aims to achieve returns mainly through investments in securities of entities that focus on income generating hotels in Makkah and has an investment horizon of 10 years.

"We see the provision of premier and sophisticated accommodation, facilities and related infrastructure in Makkah and Madinah as a huge but untapped market. In 2009, over 5.6 million Muslims visited Makkah for the Hajj and Umrah. The prospect for hotels and apartments to accommodate these pilgrims and visitors is therefore promising and substantial. The number of pilgrims and visitors to Makkah and Madinah will increase significantly over the years especially with the massive expansion of the Al-Haram Mosque and its surroundings," added Arshad.

The partnership taps the strength of CPH who have interests in the commercial, industrial and services sectors. Adel Al-Shaikh, Chief Executive of CPHI added that the legal work required to balance the interests of the promoters of the fund and the regulators was a daunting task. He urged Islamic banks and law firms to "create more advanced instruments as well as more innovative blends of instruments and structures to tap cross border opportunities".

The original article appeared in the May 2010 MIFC newsletter and can be accessed here.