Sharjah Islamic Bank (SIB) has struck a significant agreement with Turkiye Wealth Fund (TWF), marking the first instance of the Turkish sovereign wealth fund utilizing Sharia-compliant financing from an international source. The deal, a Murabaha facility valued at $100 million and established for a three-year term, signifies a growing embrace of Islamic finance within the Turkish financial landscape.
This collaboration between SIB, a prominent Islamic bank in the United Arab Emirates, and TWF, which manages strategic assets in Turkey, is expected to bolster investor confidence in the Turkish economy. The agreement comes on the heels of TWF's successful Eurobond issuance in February, which garnered high international demand.
The Murabaha agreement functions similarly to a sale and repurchase transaction. SIB will purchase an underlying asset on behalf of TWF, with the final sale price reflecting a mutually agreed-upon profit margin. This structure adheres to Islamic banking principles, which prohibit the charging of interest.
Mohamed Abdalla, Chief Executive Officer of Sharjah Islamic Bank, expressed the bank's enthusiasm for this strategic partnership. He highlighted SIB's commitment to expanding its footprint and forging new alliances, aligning with the bank's five-year strategic plan for 2024-2028. Abdalla emphasized the significance of this deal for SIB, stating that it represents the bank's first-ever Islamic financial collaboration with a leading sovereign wealth fund globally.
The involvement of Doğan Investment Bank as the financial advisor and coordinator for the transaction underscores the growing prominence of Islamic finance within the Turkish financial sector. This deal paves the way for further integration of Sharia-compliant financial instruments in Turkey, potentially attracting a wider pool of international investors seeking ethical and Sharia-compliant investment opportunities.
The agreement between SIB and TWF is expected to have a ripple effect, fostering collaboration between Islamic financial institutions in the UAE and Turkey. This partnership not only fulfills TWF's financing requirements but also serves as a testament to the growing appeal of Islamic finance as a viable and competitive financial tool on a global scale.