Gulf Islamic Investments is an asset management firm that invests in private equity, venture capital, real estate and infrastructure projects. Additionally, they specialize in special situations, turnarounds, growth financing and buyouts. Established in 2014 and headquartered in Dubai, UAE, Gulf Islamic Investments boasts a diverse clientele.
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Real Estate
Gulf Islamic Investments (GII) is a leading Shariah-compliant global alternative investment company. The firm provides clients with carefully researched, structured and risk mitigated opportunities in private equity, venture capital, infrastructure and real estate with the goal of achieving consistent and superior returns.
Real estate is an attractive investment asset class for Gulf Islamic investors looking to diversify their portfolios and take advantage of the strong economic growth in the GCC region. However, it’s essential that investors consider all aspects of this sector before investing in it.
When considering Islamic financing for real estate projects, one important element is its intended use. Property must adhere to sharia law which prohibits pork preparation or consumption, alcohol consumption, weapons ownership or gambling activities as well as conventional banking.
Real estate financing comes in many forms, from mortgages to lease-based deals. The most popular method is the ijara lease, whereby the financier purchases the property and then grants a lease to the tenant. From a Shariah perspective, this structure is considered fairer since both parties share in risks related to development and performance of the asset.
The ijara structure allows financiers to set financial covenants that must be fulfilled by the tenant in order for the lease to continue. They have the power to terminate or forfeit the lease if the tenant doesn’t fulfill these requirements, even if they completely forfeits all transaction assets if necessary.
Another popular Islamic financing structure used in real estate is a REIT (Real Estate Investment Trust). An I-REIT invests in income-producing properties and generates its profits through rental of these assets. Afterward, it distributes part of its profits to unit holders.
GII boasts an extensive network of investors who are willing to seed investments. These include members of the GCC ruling families, sovereign wealth funds and private equity firms.
GII employs a team of highly-skilled professionals with extensive deal sourcing and deal making expertise. They have an impressive record in investing across various sectors, such as private equity and venture capital. Together, these specialists collaborate closely with their clients to determine the most profitable strategies.
Private Equity
Private equity firms invest in companies with high growth potential that cannot raise capital on public markets. They do this by purchasing a stake in the business and then running it to create value, manage risk and position for an exit.
Firms typically invest through limited partners, which may be endowments, pension funds or individual investors. While these limited partners are protected against losses greater than their initial investment, they typically lack influence over investment decisions compared to a firm’s general partners.
The firm then charges its limited partners a management fee, typically 2% of assets under management (AUM), and performance fee which typically amounts to 20% of revenue generated from investments. These fees cover expenses like hiring and paying staff.
Private equity firms charge additional fees in addition to these expenses, and often make a profit from the companies they purchase. This could include dividend distributions to owners or simply selling a company for more money than it was initially purchased for.
Private equity firms often leverage debt to increase the return on an investment, known as a leveraged buyout. While this practice has become common in the industry, it comes at the cost of higher risk.
It’s essential to be aware that leverage can cause a company’s stock price to trade below its intrinsic value, or the value of the business without debt attached. But firms have an option of using equity as leverage on debt, increasing cash flow for operations and investments.
These companies often purchase companies at a reduced cost and turn around their operations, thus increasing revenues and profits. This strategy is popular among private equity firms in the United States, where many specialize in investing in lower-valued businesses.
Venture Capital
Venture capital is an essential element in the start-up process for many companies. It provides funds for hiring personnel, renting space, designing products and even financing marketing and sales efforts.
Venture capitalists typically invest in seed-stage funds, which provide initial financial backing for an idea or product. Venture companies provide this capital in exchange for a portion of the company’s equity.
These funds are typically supported by private investors such as family offices and individual investors, who expect a ten times return on their investment over five years.
To accomplish this, they prioritize the middle part of the classic industry S-curve when technologies are maturing and market needs are clear. This is typically where you will find successful venture-funded companies.
When making a potential investment, venture capitalists take into account various elements such as the business model, management experience and company success rate. Furthermore, they assess the industry’s growth potential.
As a general guideline, venture capitalists tend to steer clear of industries where competitors are emerging and growth rates have been slowing. For instance, the disk drive industry was thriving in 1983 but only five of its top 20 companies remain today.
Investing in a startup is an excellent way to gain exposure to cutting-edge technology and an expanding market, but it comes with its own set of challenges.
One major issue with traditional venture capital funds is their tendency to become overly concentrated in a few select startups, leading to an excessive focus on a few notable investments that drive most of the portfolio’s performance.
Particularly early-stage funds, where most startup attrition occurs. To have a realistic chance at hitting a unicorn, an investment fund should have invested in between 50-100+ companies.
Another issue with investing in startups is the absence of a secondary liquidity market. As such, venture capitalists must be highly proactive about managing their cash flow and finding secondary sources for follow-on investment for many of the funds they manage.
Asset Management
Gulf Islamic Investments seeks to offer investors a diverse portfolio of carefully researched, well-structured and risk-mitigated investment opportunities across private equity, venture capital, infrastructure and real estate sectors. With over $3 billion in assets under management, GII is dedicated to delivering superior and sustainable returns by investing in carefully curated growth and income projects across multiple industry sectors.
Established in 2014, GII has a global reach and an expanding portfolio of investments that include private equity, venture capital, infrastructure projects, real-estate deals across healthcare, technology, education, consumer services, food & beverage and logistics sectors. Furthermore, the firm has made investments into security systems, medical devices, enterprise systems as well as e-commerce initiatives.
The firm is a leader in the asset management sector and strives to offer its clients superior and sustained returns by investing across various industry sectors. Its core strategy is to invest in businesses with growth potential that provide competitive investment returns while also upholding ethical business practices.
With over $3 billion in assets under management and a dedicated team with 25 years of experience, GII is dedicated to offering an array of investment opportunities. Its team’s collective investment, strategic management and finance expertise enables it to identify, fund and execute innovative value-added growth strategies with the potential to deliver superior returns.
As part of their MENA expansion strategy, GII has recently established Gulf Ventures Capital in Bahrain. The new company will focus on strategic food sustainability projects across agriculture, aquaculture, food processing and production as well as logistics, green technology and healthcare.
He has extensive knowledge in Islamic finance, having structured and reviewed Shariah-compliant investment opportunities, advised on compliance matters related to Shariah investments, and disseminated an understanding of its rules through publications, public speeches and conferences. Furthermore, he serves as a member of several Islamic banks’ Shariah supervisory boards.
Gulf Islamic Investments seeks to offer investors in the Middle East and India a diverse portfolio of carefully researched, well-structured investments that will generate superior long-term returns. With an experienced team in private equity, venture capital and real estate investments, GII aims to meet this need.