One of the most rewarding aspects of a rapidly evolving nascent industry is the exciting promises that invention and innovation bring as the industry grows and takes form – the Islamic finance sector is no different. For IFN’s company focus this week, VINEETA TAN shines the spotlight on Club Ethis Investment Network, a newcomer to the Shariah compliant financial fraternity, who has brought with it an interesting and unique proposition.
Branding itself as a Shariah compliant private investment network, Singapore-based Club Ethis’ business model is not much different from those of private investment clubs whereby the firm acts as an intermediary connecting its members with potential business opportunities. However, Ethis Club stands out as the projects it invests in are sourced from the grassroots level, meaning ideas are pitched by members of the public and screened by the firm for its viability, profitability and Shariah compliance; this component bears resemblance to the highly popular crowdfunding model, except that Ethis’ investors are a select pool of individuals.
The marriage between private investment club and crowdfunding is what Umar Munshi, the head of investor relations at Ethis, calls “structured community funding”. Basically, contributions (regardless of the amount) by members would be pooled together to kickstart a pitched project by the public, into a viable commercial reality. With its strong community-centric approach, naturally Ethis’ clients are composed of entrepreneurs and SMEs, a market segment whose funding needs Umar thinks are generally left unmet.
Since opening its doors about six months ago in March, the firm has received strong support and demand from both sides of the spectrum: keen investors and hopeful clients. Ethis has since assisted in launching two businesses via a Mudarabah arrangement for US$64,000; four SME Murabahah micro-financing initiatives amounting to US$42,900; and US$401,248 through its collective real estate investment portfolio which is structured based on the concept of Mudarabah.
Speaking to IFN, Umar revealed: “We are currently about to launch two new projects, including our first Collective Real Estate Development (CRED) Project.” The CRED project will be run by Ethis’ Indonesian counterpart, Ethis Indo Asia, and involves US$1.6 million in investment in a small resort in Ubud, Bali while the second project, worth US$15,000, will benefit a two-year old food and beverage delivery/logistics business.
It is also perhaps interesting to note that Ethis’ Shariah board is comprised of two relatively young scholars; in an industry which is firmly built upon a handful of well learned scholars with vast and long experience to credit to their reputation, this may be perceived as a signal of a small but growing acceptance of the next generation of Shariah scholars. Couple this with Ethis’ proposition which allows Shariah-seeking investors of minimum capital with opportunities to invest in ethical projects along the lines of religious principles, this humble platform could be a breath of fresh air for the industry.