Safeena Inks Debut Acquisition

To many shipowners, Islamic finance is often perceived as complicated and challenging to tap into in practice. The reasons stem from the fact that any Islamic funding structures will have to be designed to accommodate the differences that Islamic banking has compared to conventional banking. Islamic banking does not recognise the time value of money and is very much based on productive (or real) investment. It also forbids interest but allow profits from business activities. Despite these challenges, we are delighted to observe that Islamic banks are working hard to offer more ship and aircraft financing products.

Readers of Marine Money Asia may be familiar with Safeena – the first Malaysian Islamic shipping fund. Last week, Safeena announced in Singapore that it has acquired its first vessel since its establishment more than a year ago. Safeena which literally means “my ship” in Arabic, was launched on 28 April 2008, with a committed equity participation from its two sponsors, Asian Finance Bank (“AFB”) and AmanahRaya Investment Bank (“ARIB”) amounting to USD 50 million. The sponsors aim to expand the fund further to USD 300 million through a combination of equity and debt to acquire a portfolio of quality yielding vessels that can provide a stable income stream to its investors. On a related note, we are also extremely excited to hear that AFB is currently working on mandates to advise on major Sukuk issuances by quasi/government related agencies in Korea across all major industries, including the shipping sector.

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