Deep Dive: Islamic Trade Finance Corporation’s New Energy Portfolio

It was recently announced that Federated Investors, Inc. one of the largest investment managers in the United States, and the International Islamic Trade Finance Corporation (ITFC), member of the Islamic Development Bank (IsDB) Group, announced an agreement to launch a sovereign energy trade-finance portfolio.

Trade Finance Global spoke to the team to find out more about the ITFC Sovereign Energy Fund (ISEF), which will be sponsored and managed by ITFC with a strategic input from Federated Investors (UK) LLP.

ISEF aims to raise U.S. $300 million for its first close.

Why is the ITFC Sovereign Energy Fund necessary today, when there are many financing structures in place?

ITFC Sovereign Energy Fund offers a unique investment positioning for investors as it covers the entire Energy Value Chain with a Sovereign Secured Risk exposure. This is the first of its kind offering dynamics of Energy Trade Finance in Growth Market and Sovereign Guarantee.

How does OPEC and oil prices affect ISEF?

ISEF will focus on Electricity, Natural Gas, Crude Oil, Petroleum Products, LPGs & Chemicals, so it will be naturally impacted by OPEC and oil prices.

ISEF will also focus on Sovereign or Semi Sovereign counterparts, which strongly requires commodities purchases for their respective country’s needs. ISEF team will closely monitor commodities fluctuation and adapt its offer to respond to the demand and ensure best interest of its investors,

What is Shari’ah compliance and what steps are ITFC doing to ensure the portfolio is compliant?

The investment policy of the Fund is to acquire Shariah Compliant Trade Finance Investments primarily within emerging markets. To ensure that all investments are following the principles of Shariah, ISEF as part of ITFC will rely on the Islamic Development Bank Group (IsDB) Shariah Board. IsDB Shariah Board has been a reference in the Shariah investment since early years of Islamic Finance.

The Fund is prohibited from accepting Trade Finance Investments where the Trade Finance Investment is generated from the sale of goods and/or activities that are non-Shariah Compliant as determined by the Shariah Board. In general, the Prohibited Activities will include, but not be limited to, activities related to: alcohol, tobacco, pork production, packaging and processing or any other activity deemed to be offensive to Shariah.

Specifically, in all matters regarding the Fund, Prohibited Activities shall be governed by the instruction and rulings of the Shariah Board.

Who are the recipients of ITFC and how big do you expect a typical transaction to be?

The fund will invest in energy related trade finance, structured trade, export finance, import finance, supply chain financing and project finance assets of sovereign or semi sovereign entities. Each transaction should not exceed 10% of the fund, with expected average transaction size between US$30m and US$50m

Which commodities in the sector will you be focusing on?

ISEF will focus on Electricity, Natural Gas, Crude Oil, Petroleum Products, LPGs & Chemicals,

Who is heading up the portfolio? Please give a background

ITFC’s oversight of ISEF I will be handled by an independent team dedicated to the fund operation based in Jeddah, KSA and Dubai, UAE. The fund is currently managed by Anisse Terai, Senior Manager Asset Management and Miloud Boudjemai, Fund Manager. The team will be supported by a Senior team from Federated Investors as part of their sub-advisory mandate Ihab Salib, Senior Vice President, Senior Portfolio Manager, Head of International Fixed Income Group of Federated Investors and Christopher McGinley, Vice President, Portfolio Manager, Senior Investment Analyst, Head of Trade Finance Team at Federated Investment.

Anisse Terai is a seasoned Investment professional with more than 10 years’ experience with a focus on Energy. Prior to joining ITFC, Anisse was advisor to the Chairman and CEO of Sonatrach, the Algerian National Oil Company. Anisse has 7 years of experience in finance, strategy, policy, project management, trade and market analysis, focused on the energy industry.  He holds a Bachelor’s degree with distinction from HEC Alger, a Master’s Degree from Institut d’Etudes Politiques de Paris – Sciences Po and a Post-Master Degree with distinction (Magna Cum Laude) from the French Ecole Nationale d’Administration.

Miloud Boudjemai, is a fund manager specialist with more than 7 years’ experience in investment. Prior to joining ITFC, Miloud was an Associate Director at the Abraaj Group focusing on private equity investment in the MENA region. Miloud was also Senior Analyst at Barclays Capital, a London-based investment banking working on M&A and ECM transactions in the Oil & Gas Sector for the EMEA region. Miloud holds a MSc of Economics from Bocconi University Milan and a MA of Finance & Strategy from Sciences Po Paris.

Ihab Salib is Senior Vice President, Senior Portfolio Manager, Head of International Fixed Income Group of Federated Investors. He is responsible for product strategy, portfolio management, and research in the international fixed income area including Trade Finance. He was a Senior Trader, global fixed income and foreign exchange securities at Federated Investors. Prior to that he was an Associate Director, Senior Analyst/Trader at UBS Brinson. He holds a B.A. from State University of New York at Stony Brook.

Christopher McGinley is Vice President, Portfolio Manager, Senior Investment Analyst, Head of Trade Finance Team at Federated Investment. He leads portfolio management and research activities in Trade Finance. He holds a. B.S. and an M.P.I.A. from University of Pittsburgh.

 

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