Atif A Abdulmalik

The results speak for themselves. Profits hit USD20.5m in the year 2000, up from USD16m in 1999. Indeed, during 2000 FIIB made its first exit from a major investment, and sold Computer Generation Incorporated for USD248 million against the USD170 million it paid eighteen months earlier. But why invest in the US and not closer to home?

'This is a question we often get asked,' says ceo Atif A Abdulmalik, a former Investcorp executive. 'Basically our clients usually already have major investments in this part of the world and are looking for diversification. So our investors do not need help in looking for investments here.

'The US market has the benefit of considerable depth, and a large deal flow. In real estate we will select three or four deals out of a hundred, whereas in the Gulf markets there are very few investment opportunities and a lot of people are chasing them.

Abdulmalik and his fellow directors spotted a gap in the Islamic banking market four years ago for medium-risk investment opportunities that were Shari'ah compliant. They took this idea to a large Saudi Arabian family, who remain a key shareholder, and today there are some 80 shareholders in FIIB with the management holding an 11 per cent stake.

In a timely exit from Computer Generation Incorporation FIIB has avoided the impact of the technology crash on its investment, and given its shareholders a quick return. But Abdulmalik says this is not the general strategy of the Bank, and happened because Intec Telecom of the UK came up with a very good offer.

More typical is FIIB's USD84m investment in the Caribou Coffee Company, which aims to rival Starbucks by extending its franchisee network across the USA. 'We always have a three to five year holding horizon,' says Abdulmalik. 'The same is true for our real estate investments in the USA'.

For example, this April FIIB announced a USD243m joint venture real estate fund with ProLogis Trust. The fund will invest in 27 industrial distribution facilities across the USA, and expects a yield of 10.25 per cent. Adulmalik describes this as a typical FIIB marriage of an attractive monthly yield with a relatively low risk profile.

There is no doubt that the FIIB has carved itself an attractive niche for itself in the Islamic banking world, and its ceo also has strong beliefs on how Islamic banking should develop in the future.

He believes in flat management structures and the rewarding of people strictly on the basis of performance and not length of service. And he also strongly contends that Islamic-banking products must match conventional banking products in terms of risk and return in order to be truly competitive.

This is very much the modern face of Islamic banking, and the banking community can expect to hear a lot more about the First Islamic Investment Bank, which is also a good deal more open and transparent than many of its Islamic banking counterparts.