Unicorn Investment Bank from Bahrain was not far behind and in 2006 launched its $150m Unicorn Global Private Equity Fund.
The most successful private equity funds are tightly targeted and so, to provide some focus, investments had to be in one of four categories: consumer products, heath care, business services, and light manufacturing.
That same year, 2006, also saw the establishment of Millennium Private Equity from the Dubai Islamic Bank stable Harking back to the point we made about the Islamic finance industry's over exposure to real estate however, up to 70% of the funds will have real estate exposure.
Since those early days the industry has grown and developed to some extent around the world although there has been a growth focus on the GCC which stems largely from the massive petrodollar boom caused by sky-high oil prices.
Range of funds
Other noteworthy examples of Islamic private equity include the following:
• In January 2007 the Enmaa (Dubai Growth Fund) from 3i Capital Group was launched. This $100m fund was intended to invest in public and private equity securities primarily in the Middle East and beyond.
• In April 2007 Khaleej Finance and Investment of Bahrain launched its $200m
Indian Private Equity Fund with the aim of investing 50/50 in private equity and real
estate in India.
• The Al Imtiaz Investment Fund is a dinar denominated open ended private equity
fund launched in October 2007 by Al Imtiaz Investment Company with a focus on both private equity and real estate.
• Millennium Private Equity and Global of Kuwait launched the $500m Global DIB Millennium Islamic Buyout Fund in 2008 as a true private equity fund focused on companies located in the GCC, Turkey, Egypt, Jordan, Lebanon, Tunisia, and Morocco.
• In March of 2008 the $1bn Dhow Gulf Opportunities Fund was launched by Qatar Islamic Bank (QIB) as a dollar denominated closed ended fund with a focus on telecoms, environmental recycling technologies, media, oil & gas, and infrastructure.
• Arcapita, the Islamic investment bank from Bahrain, successfully exited its private
equity investment in US-fast food firm Church's Chicken in mid-2009. The sale, to a San Francisco private equity group Friedman Fleischer & Lowe, is said to have seen Arcapita double its money on the $390m it paid for Church's back
in December 2004.
The pool of funds listed here, from IFIS, is rather small and because of the wide variations in published performance figures, an average return figure for such funds would be largely meaningless.
The figures tend to suggest that the great promise offered by private equity transactions to the Islamic finance industry has not been met and the Islamic private equity industry remains ready for the boom that is due.
In fairness there are not many asset classes that have performed well over the past few quarters so perhaps the kindest conclusion that can be drawn from these figures is that the Islamic private equity sector has not performed any worse than others.
Over the years a number of specialist Islamic investment banks has grown up, some with a specific focus on Islamic private equity and others with a more general investment focus.