By Andrew England in Riyadh 

Investec Asset Management and a Saudi investment house are teaming up to launch a fund that will be compliant with Islamic law and invest in African equity markets.

The fund, which aims to raise more than $100m (€64m, £51m) in the first year, will be the first Sharia-compliant fund in the Middle East that will specialise in Africa.

Designed to tap into the huge liquidity in Saudi Arabia - the oil-rich region's largest economy - it highlights the growth in Islamic financial services.

Investec, based in Johannesburg and specialising in African and frontier investment, will manage the fund and be responsible for stock selection, while Jadwa Investment, a Riyadh-based company, will raise the funds and advise on whether stocks are Sharia-compliant.

Jadwa, which was set up in 2007, has about 5.2bn riyals ($1.4bn, €800m, £704m) under management and is looking to expand its stable of Islamic products for both the Saudi and international markets.

It already has a tie-up with Russell Investments, and together the two houses set up a Dublin-based company (Russell Jadwa Sharia Based Funds) last year that launched a world equity fund and an emerging markets fund.

Both are compliant with Islamic law, and the two have plans to launch a third fund - a global real estate investment trusts fund - later this year, said Fadi Tabbara, head of asset management at Jadwa.

The firm is also applying for regulatory approval from Saudi authorities to set up two Dublin-domiciled, Sharia-compliant passive funds to track the Saudi bourse and a Gulf Co-operation Council (GCC) index, Mr Tabbara said. If it gained approval, Jadwa would set up another company in the Irish capital and the funds would be open to global investors. Direct foreign investment in the Saudi market is restricted to residents of the GCC.

Source: http://www.zawya.com