Turkey’s Alkhair Capital plans expansion, eyes Islamic bond advisory

ISTANBUL - Reuters

Turkish Islamic asset manager Alkhair Capital plans to launch new funds this year and will start a service to advice on Islamic bonds, or sukuk, its general manager said.

Three Turkish state-run banks are launching Islamic units, widening the reach of interest-free finance in the majority Muslim nation, but wealth management has lagged behind with only a handful of products in the market.

Alkhair Capital, majority-owned by Bahrain’s Bank Alkhair, is the only full-fledged Islamic investment firm in the country, with AZ Global and BMD Securities offering some sharia-compliant products of their own.

Last month, the firm raised its capital to 5 million lira ($1.86 million) from 2 million lira, to meet new capital requirements coming into force in July, a move that will also help fuel its expansion drive.

“We are increasing our headcount, we are adapting our company to the new legislation and expanding our product base,” general manager Ali İlhan told Reuters in emailed comments.

“We are planning to launch new mutual funds in the near future - probably in the third quarter.”

The firm currently manages three Islamic funds, which screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling, in much the same way as socially responsible funds.

A wider pool of Islamic financial instruments has emerged in recent years which have improved the sector’s prospects, and the firm plans to develop discretionary portfolio management (DPM) products and to advise clients on their sukuk investments, İlhan said.

“Sukuk is a relatively new instrument for Turkish investors and we see a great opportunity in this line of business. We have not been very active on DPM lately, but this year we are planning to offer different alternatives for Islamic investors.”

The introduction of a new electronic fund distribution system, known as TEFAS, will also allow for the selling of its funds through third-parties, he added.

New entrants are also likely. In September, Turkey’s RHEA Asset Management and Malaysia’s CIMB-Principal Islamic Asset Management signed an agreement to explore joint opportunities in the sector.