Hani Baothman on investment funds | Sidra Capital | Video

Transcript

Sidra Capital has been established as a Shariah-compliant investment bank since 2009. Hani Baothman, CEO of Sidra Capital talks to World Finance about some of their investment offerings.

World Finance: Tell us about some of the investment opportunities that you offer your clients

Hani Baothman: Sidra Capital is a Saudi investment company that is geared towards providing investment opportunities to Saudi investors. We’re mainly divided into two divisions, asset management and investment banking. In the investment banking, we provide corporate advice to Saudi families, we’ve been involved in restructuring some of the biggest Saudi family groups lately in Saudi Arabia. We’ve also worked with big clients like the Ministry of Finance, in which we worked together in setting up a mortgage finance company. That has the involvement of CMHC which is a semi-crown entity in Canada.

“We wanted to do something that was beneficial to the community”

World Finance: And how have your core philosophies informed your investment approach?

Hani Baothman: Sidra’s shareholders and management believe that in the beginning we wanted to do something that was beneficial to the community. This is why we stayed away, as per our belief, from investments that do not benefit the people back home, such as equities, because there are other players who can do this better than us, and we don’t see direct impact on people’s lives with such investment products. So this is why we ended up doing mainly private equity related transactions, whether it’s in advisory or in the asset management side.

World Finance: Tell us about your Stirling UK Real Estate Fund

Hani Baothman: SURF was a fund that was established with our partner in London Gatehouse. We had the idea of setting up an income-generating real estate fund with UK assets. The problem we faced in the beginning was that most of the funds that we looked at were not fully 100 percent Shariah-compliant. This is why I decided to set up our own fund, it’s £100,000,000 fund, it looks for assets that are leased to blue-chip companies, a minimum lease period of 13 years, a minimum yield of 7.5 percent, and we have successfully managed to place this fund in Saudi and investors like it.

“We managed to structure the first fully 100 percent Shariah-compliant fund”

World Finance: So what differentiates your Sterling fund from other real estate funds on the market?

Hani Baothman: There are three main points, the first one is that as an asset manager we seeded the fund with a minimum of 30 percent of the fund, so as they say, we put money where our mouth is- this is number one. Number two is that we managed to structure the first fully 100 percent Shariah-compliant fund. Number three, most of the investors in this fund are dollar based investors, we don’t have any UK or Sterling based investors, that gives us the liberty to play the exchange game should the Stirling appreciate and the investors decide to exit, they may play the currency game, in addition to the real estate returns that the fund generates.

World Finance: Now, World Finance recently recognised your Ancile Global Structured Trade Investment Fund, why do you think this is?

Hani Baothman: It’s a new fund which we did with a Geneva-based asset manager, INOKS in London. In the beginning we wanted to get into commodity finance, but the problem we faced was that most of it was like structured product, we didn’t see anyone who is doing deal commodity finance. We went with them to Africa, we saw the farmers they’re financing, the impact such programs are having on people’s lives, smart returns such investments make and we decided to go back with them and create the first Shariah-compliant trade finance fund, which we did in Sidra Ancile Fund. Now this fund again as I said, is fully Shariah-compliant, it really considers the sustainable development part, we don’t provide farmers with bad chemicals, although we’re an investment manager, we do care about investment related activities that our fund gets involved in.

“One of the things that we find is a truly Shariah application in our fund is the sustainable development”

World Finance: Finally, do you think that being Shariah-compliant gives you an advantage over other funds?

Hani Baothman: Some investors and asset managers limit the Shariah part of the fund to the structure and legality of the fund, which actually we do, this is part of our Shariah mandate, but we take it a step further. We look into sustainable development, Shariah actually guides you towards not harming the land, not harming the environment, taking care of the environment you work in, and this is one of the things that we find is a truly truly Shariah application in our fund, which is the sustainable development part of it.

World Finance: Hani, thank you.

Hani Baothman: Thanks Nick, thank you.