His favorite city there is
"When I started out in finance, the
Today, he's the president, CEO and chairman of
Meyer got into the business after visiting a portfolio-manager friend in
"So his uncle said, 'I wish one of you guys would take Islamic finance seriously, because the guy who takes it seriously can really add tremendous benefits,'" Meyer recalled.
That's how it started.
This year will be Meyer's 15th in Islamic finance, and it's going to be a good one.
On Thursday he and two partners (one American, one Saudi) announced their new wealth management firm,
Meyer is one among many in the industry who expect big things for Islamic finance in the next few years. "There's not that many people trying to build out Islamic finance, but there should be," he said. "It's just hard work and common sense."
Though the concepts are hundreds of years old, a modern version of Islamic finance has evolved in recent generations to satisfy the needs of people looking to invest without going against their religious beliefs. Besides the moral incentives, there's real money to be made. The Shariah-compliant sector has grown to
As the markets of the Gulf countries and
"We've just come through a very difficult period for the financial sectors," said
"What you are seeing is an opportunity for Islamic finance to fill some of the voids created by pullback in the conventional markets," O'Connor said, and he cited the sukuk market as an example. "Sukuk" is an Arabic word that translates literally to "certificates" (it's always plural) but is understood to represent a bond-like product, though the comparison is not precise.
"As interest-bearing transactions are prohibited under Islamic commercial law, sukuk are used to raise funds using various permissible contracts," said
Basically, Islamic investors can't make money from money. There must be real assets involved that can be easily identified. A sukuk holder can receive rental payments from the leasing of a specific property but cannot lend money to a leasing company.
There are also many places where the money should not be spent. Funds cannot be spent in ordinary banking activities, or fund projects like tobacco or alcohol production. To ensure compliance, Shariah scholars regularly audit financial activities.
It's generally understood that money will be used to finance projects that are socially responsible. That way, even if someone purchased a sovereign sukuk, they know the money will be spent on activities that promote social good.
Ahmed listed 14 types of sukuk that can be debt-based, asset-based, equity-based and agency-based. The most popular kind are leasing-based (also called ijarah), which is raising sukuk for real estate. Sorting through the products can be complicated, but that hasn't stopped sukuk issuances from increasing globally as non-Muslim investors have become more interested.
"On the demand side, most purchases are pious Muslims who believe that, for all their imperfections, the sukuk are morally superior to regular bonds," said
But religion isn't the only reason.
"A second source is people looking for diversification," Kuran said, adding that the social-responsibility aspect is appealing in the same way that an environmentally conscious investor will put money into "green" funds.
Standard & Poor's released a report on
It's this combination that makes
"We believe that for investors looking to buy Islamic bonds outside of traditional markets like
In October, a Nigerian state issued a Shariah-compliant bond, a seven-year instrument that raised about
Governments that issue sukuk benefit from a new and broad investor base, and the possibility to build up their reserves.
"Sukuk offer an opportunity to tap the large pool of funds from the
Beyond the fact that
The top 20 Islamic banks in the world have been growing by about 16 percent annually for the past three years, according to Ernst & Young, which has attracted the attention of investors in the developed world as well. The 2013
"There are some countries whose instincts sometimes incline toward pulling up the drawbridge. But if they do so, they fail to recognize that the way the world is changing affects their future success," Cameron said. "
Islamic finance is becoming more common in
"When you look at the U.S., there are a few key challenges to growth in the sukuk market – the first is political will," observed Kavilash Chawla, managing director of Nur Global Strategies, a
Chawla cited Cameron's speech in
He also referred to problems
Despite that setback, many Americans are still looking to get involved.
"Retail consumers are looking for financial products that are aligned to their value base," Chawla said, adding that corporate non-Muslim consumers are also interested. "From a pricing perspective, it's attractive," he said.
Part of what Chawla's firm does is facilitate connections between American companies and Islamic investors. He gave an example of one Midwestern company he's advising on Shariah-compliant financing to help appeal to investors from the
Shariah, after all, is a particularly freighted term in the U.S., where it carries negative political connotations. That's partly due to a general lack of understanding of what Shariah entails, particularly relative to the financial world. In August, for example,
But on the corporate side, politics aren't the problem.
"The clients don't understand how you access some of the Shariah-compliant capital that's out there," Chawla said. "They don't have a deep understanding of how to structure sukuk or how it affects costs." Explaining those things is part of his firm's role.
Many of the companies Chawla works with are non-Muslim and are simply trying to tap into a market with major potential. He said he's working with a large U.S.-based project in the Midwest that's making forays into the halal food industry and wants their finances to align with Islamic law.
Though many of these ideas are new to American companies, they're more familiar farther south. According to the CIA World Fact Book, Muslims represent less than 1 percent of
The pair has also organized Shariah-compliant financing for ethanol, sugar and soy exports. To them,
"It allows us to extract a larger profit rate, while keeping the risks contained," he said, adding that now is the time to move in these markets as European and global banks begin to scale back their exposure.
To Tarmoom and Valdivieso, it's a bet on South-South trade – trade between emerging markets – that they feel is only going to keep growing. And given the fact that a large proportion of the populations in developing countries in the
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