Modeling a new Islamic private equity shipping fund to promote international shipping in Malaysia
The purpose of this research is to demonstrate how we would construct a Shari’ah compliant private equity shipping fund in order to demonstrate why institutional investors and investment banks should provide capital, and thereby develop investment in international shipping. Shipping is a strong grow...
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| Main Authors: | , , |
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| Format: | Monograph |
| Language: | English |
| Published: |
2017
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/57053/ http://irep.iium.edu.my/57053/1/57053-%20Modelling%20a%20new%20Islamic%20prive%20equity%20shipping%20fund.pdf |
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| Summary: | The purpose of this research is to demonstrate how we would construct a Shari’ah compliant private equity shipping fund in order to demonstrate why institutional investors and investment banks should provide capital, and thereby develop investment in international shipping. Shipping is a strong growth industry with bout 85% of global trade carried by the international shipping industry. The problem is that shipping is a highly capital intensive industry and currently 75% of ship lending has been conducted by European banks and financed on a conventional basis. Post financial crisis, ship owners, ship lenders and shipyards have all been exposed to the impact of over-levered balance sheets and debt finance. Our objectives are to evaluate the risks and returns of shipping under the framework of Islamic private equity finance, and to analyze the performance of maritime investments over the long term, in order to appeal to institutional investors and financiers. Accordingly, our methodology adopts a financial analysis of a full population of historical data over a period of 20 years to measure shipping performance in terms of a Maritime Return On Investment (MROI) based on the IRR method, that takes into account both income and capital appreciation. The expected outcome is that we seek to demonstrate that the marginal efficiency of capital (IRR) reveals that equity finance and profit sharing, rather than debt finance at interest, is more efficient in allocating investible resources to develop the international shipping industry. The significance is that Islamic private equity finance should appeal to institutional investors, within the Malaysian and global financial community, to promote and develop international shipping from Malaysia, in line with government policies on shipping and Islamic finance. |
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