An independent Takaful (Islamic insurance) company in the UK — British Islamic Insurance Holdings (BIIH), has raised $40 million through private placement for the launch of the company, according to Bradley Brandon-Cross, chief executive officer.
Brandon-Cross said that investors from Saudi Arabia account for 50 per cent of the total amount raised from Gulf investors.
"The aim is to raise $160 million through the IPO and another equal amount through a second tranche to increase the capitalisation to $350-360 million in due course," he said.
He added that as part of its fund-raising drive, the company will float IPO on the London Stock Exchange in April next year. The shares, priced at 12.5 pence each, are also open for subscription to high net worth individuals, institutional investors and family-owned enterprises from the Gulf.
He said that prominent Saudi businessman Abdul Aziz Hamad Al Jomaih is the chairman of the new company and has invested $4 million in the company. When capitalized, it is expected to be the second largest Takaful firm in the world and the market leader in the UK.
According to Brandon-Cross, BIIH envisages raising $500 million over a five-year period.
Brandon-Cross said that BIIH will first target British Muslims for Takaful insurance, since they number over two million out of the 15 million Muslims in Europe. The next target will be European countries, especially France and Germany, followed by the Gulf States and some Asian countries under a phased programme.
He said that BIIH will also promote ethical investments by channeling revenue from the premia into Shariah-compatible investment vehicles. "Ethical insurance resonates with Muslim investors. We are not trading on their beliefs, but we are providing them something that is compatible with their beliefs. We are also keen that non-Muslims should also come on board, since they do realises the competitive advantages of Takaful insurance compared to the plethora of other insurance products on the market," he said.
He explained that Islamic insurance was gaining wider acceptance not only among Muslims but also among non-Muslims, especially now that motor insurance is compulsory in Britain. Other target areas include insurance of buildings and their assets
(such as home furniture, etc.) as well as the small and medium enterprises.
He said that the market "penetration rate is high and the returns on investments are attractive. "Our research shows that the GCC average per capita insurance premium is $131 compared to $ 4,600 for Britain. That explains the great deal of interest among the Gulf investors," he added.
Brandon-Cross said that their company has set up a three-member Shariah committee to vet insurance products before they are launched on the market. The members include ShAikh Nizam Yaquby (Bahrain), Dr. Mohammed Elgari (Saudi Arabia) and Mufti Abdul Kader Barkatullah (BIIH Shariah committee's member).