Singapore to Draw Islamic Investments With Sabana, HSBC Says

Singapore will attract more Islamic investments from the Middle East following the share sale of Sabana Shari’ah Compliant Industrial REIT, the world’s largest Islamic property trust, HSBC Holdings Plc said.

Sabana raised as much as S$664.4 million ($503 million) in the sale. The 458 million shares offered, which exclude reserved stock or those for key investors, were 2.5 times subscribed, the trust said in a statement yesterday. The shares for retail investors drew 12 times more demand, said Rafe Haneef, managing director of global markets for HSBC Amanah, the Shariah-compliant unit of Europe’s largest bank.

“If you look at investors in the region and in the Middle East, banks, investment houses and fund managers are looking for Shariah-compliant assets,” he said in a phone interview from Singapore today. “The launching of Sabana fits well within Singapore’s ambitions to become a hub for Islamic finance.”

The Islamic finance industry has been growing 20 percent annually since 2000 and its assets are estimated to reach $1.6 trillion by 2012 compared with $660 billion in 2007, according to an Islamic Financial Services Board report issued in April. Islamic law, or Shariah, bans investment in industries such as gambling and alcohol.

Sabana shares fell 2.7 percent to S$1.02 at the 5:05 p.m. close in Singapore from the offer price of S$1.05. The benchmark Straits Times Index dropped less than 0.1 percent.

The Monetary Authority of Singapore said in July that growing depth and liquidity will prompt more companies to use Islamic finance for funding and investments, and more products and investors are needed to expand the industry. The government started a S$200 million sukuk issuance program in January 2009, which was set up to provide “regulatory assets” to institutions offering Islamic services, the central bank said.

HSBC, along with United Overseas Bank Ltd. and Daiwa Securities Group Inc.’s Daiwa Capital Markets Singapore Ltd., managed the Sabana share sale.

To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net

To contact the editor responsible for this story: Linus Chua in Singapore at lchua@bloomberg.net

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