New BSX listing sponsor eyes sukuk market
Get ready to hear more about sukuk, a finance structure that accounts for investments that are collectively valued at upwards of $100 billion worldwide.
While the term may be new to many people in Bermuda, in other parts of the world, particularly Asia, the Middle East and Europe, it is familiar.
Bermudian-based Alexander Securities Limited has joined the Bermuda Stock Exchange as a listing sponsor, and it is seeking to bring new products, such as sukuk listing, to the BSX.
Sukuk is a financial certificate similar to a bond, and is designed for institutional investors, such as sovereign wealth funds, big banks, pension funds and those looking for long-term cashflow.
“There is a growing demand for these securities to diversify portfolios,” said Belaid Jheengoor, chief executive officer of Alexander Advisory Limited.
Sukuk can be found on exchanges such as London, Luxembourg, Bahrain and Kuala Lumpur. Among others, the financial structure is used by Islamic corporations and organisations as it complies with Sharia — Islamic religious law.
However, Mr Jheengoor stressed that they are “religion neutral”, and pointed out that it is almost ten years since General Electric became the first US corporation to issue a sukuk.
The demand is growing, and Pembroke-based Alexander Securities Ltd now hopes to bring sukuk products to the BSX.
James Watlington, of ASL, said: “We are absolutely delighted to join the BSX as a listing sponsor. In setting up ASL, we are expanding our service offerings to existing clients as well as attracting new business and investors to Bermuda.
“Our multidisciplinary team with combined legal and financial expertise provides bespoke solutions to benefit our clients, and we are at the forefront of innovation. ASL is seeking to bring new products such as Sukuk listing to the BSX.”
The company started in 2005 offering legal corporate services. Mr Watlington said: “We have had various clients ask about joining the stock exchange. We have thought about becoming a listing sponsor for five years.
“A number of clients said they were interested in pursuing this. We are expanding to full consultancy and listing sponsor.”
Mr Jheengoor said: “We like to view ourself as a one-stop shop for investors coming to Bermuda.”
Referring to the sukuk market, he said it features sovereign funds and major financial institutions that are rated by the likes of S&P and Moody's.
For Bermuda, there is the potential of more incorporations, which may bring more jobs to provide service support, and greater recognition of the island as a place to do business and invest.
Mr Watlington said: “We have ease of incorporation. There are advantages for certain institutional investors to place investments into one of these vehicles.”
He said there is awareness of the need for “a presence to create substance,” such as being incorporated in Bermuda and listed on its stock exchange.
Welcoming ASL as a listing sponsor, Greg Wojciechowski, president and CEO of the BSX, said: “ASL joins a growing list of companies that have identified a commercial opportunity to provide their client base with an exciting listing venue alternative, through the BSX.”
He told The Royal Gazette: “We are growing to be a hub for global diversity. We did a lot of work in Islamic finance. It is an asset class that has been around for a while. The BSX provides an excellent crossroads from where we sit, between the US, Europe, Middle East and Asia.”
Mr Wojciechowski added: “It leverages the infrastructure here, the regulation and legal expertise. It brings a different kind of fixed income.
“This is the first step. Bermuda needs to continue to draw investments. As the exchange expands, more jobs arrive here, and there is a move towards substantial offices for business that are here.”