Ridge Islamic Capital set the market abuzz upon its launch on the 20th September 2012, as the Egypt-based investment banking and asset management firm outlined plans aimed at capitalizing on the country’s large untapped market for Islamic finance.
The firm was set up in May this year, after sister company Ridge Solutions International Holdings (Ridge Solutions International), based in Dubai, acquired Egyptian investment banking and asset management company El Rashad Holding. El Rashad, which operated under a conventional finance structure, will now convert its assets to comply with Shariah, with the entity now known as Ridge Islamic Capital.
Armed with an aggressive growth strategy and an overall conducive environment for Islamic finance in Egypt following the Islamist Freedom and Justice Party’s rise to power, Ridge Islamic seems to be entering the right market at just the right time.
Building the foundation
Ridge Islamic is backed by the Ridge Solutions group, an Angolan company with interests in sectors including engineering; project management and infrastructure development; residential and commercial property development; agriculture; aquaculture; investment fund management and corporate finance advisory services; and natural resources and industry.
Of note is that the Ridge Islamic has roped in veteran Islamic banker Dr Hussain Hassan as the chairman of its Shariah supervisory board. Hussain’s experience includes a stint as the head of structuring for Deutsche Bank’s MENA business and as the bank’s head of Islamic finance, before leaving to join UBS as its global head of Islamic finance and head of MENA securities structuring.
At the launch of Ridge Islamic, Hussain noted that: “We believe that now is the right time for Ridge Islamic to emerge in Egypt and offer new and much needed investment solutions. Our team of experts has developed a number of structures…which would yield the same expected outcome as conventional investments.”
Getting a leg up
Despite its recent launch, Ridge Islamic will not be starting from scratch. The firm has taken over El Rashad’s existing business, which includes the management of three funds worth around EGP20 million (US$3.28 million), including the Misr Iran Bank Mutual Fund 3 launched in 2009 and a US$100 million Arab-Islamic fund of funds, managed out of Bahrain.
Ridge Islamic, which has paid-up capital of EGP22.5 million (US$3.69 million), will also see a further US$100 million capital injection from Ridge Capital Solutions, which could be used for the establishment of a US$150 million Shariah compliant fund of funds. It is also reportedly evaluating potential acquisitions as it seeks to add brokerage services to its capabilities.
The firm is also expected to get a leg-up through the Egyptian government’s keen interest in developing Islamic finance in the country. In addition to its efforts in developing legislation for Sukuk issuances in Egypt, the government has also targeted to increase the local Islamic finance industry’s market share to 35% from around 5% currently.
Miguel R Henriques, the managing director of Ridge Islamic, noted that: “With a population that exceeds 83 million and the government’s set target to increase Shariah compliant finance, Egypt represents an attractive proposition for us to present and differentiate our products from modern and traditional Islamic banking.”
Early mover
While it may be early days yet for Ridge Islamic, the firm could also potentially benefit from being an early mover in Egypt’s fledgling Islamic finance market. Although a handful of banks offer Islamic products, such as Al Baraka Bank Egypt and Abu Dhabi Islamic Bank’s Egypt unit, National Bank for Development, there remain prospects for Ridge Islamic to tap the Shariah compliant corporate and investment banking market.
While Egypt’s EFG-Hermes is currently working on a strategic alliance on investment banking with Qatar’s Shariah compliant QInvest, that venture has yet to take off, leaving room for Ridge Islamic to quickly make its mark in the untapped market.
Additionally, although the Islamic finance industry has waxed lyrical about the potential for Islamic finance in Egypt following the FJP’s emergence into power, Ridge Islamic appears to be the only firm that is walking the walk in tapping the market; and capitalizing on Egypt’s potential as a springboard into the rest of the MENA region. Ramos, who noted that the Arab spring had triggered drastic changes in the region, necessitating the adoption of a different approact to identifying business and investment opportunities, also said that: “We strongly believe that starting the company in Egypt marks the beginning of providing Shariah compliant solutions in the region, which would enhance our revenues as well as our investors and shareholders’ value.” — EB