The fortunes of Pakistan's Meezan Bank are on an upward curve, if Muhammad Asad, executive vice president and chief investment officer of Al Meezan Investment Management is to be believed.
The bank has seen a huge influx of funds this year, and Asad told The Islamic Globe that this has a lot to do with the Government of Pakistan's Sukuk program, which has enjoyed enormous local demand. He said: "Institutional investors have of late been making huge investments in our funds, and a lot of this is to do with Al Meezan emerging as one of the main investors in the sovereign Ijarah Sukuk issued by GoP."
Currently Al Meezan has some PKR30bn ($349m) of assets under management out of a total market of PKR280bn ($3.26bn), making it Pakistan's largest private sector asset management company. The GoP manages the lion's share of Shari'ah compliant assets in Pakistan.
The aggregate value of the various tranches of the GoP Sukuk is PKR220bn ($2.56bn) and this is set to increase as the government prepares to issue more debt. Asad argued that the GoP program has been so readily received because: "Islamic banks have been suffering from surplus liquidity as they are not allowed to invest in [conventional] interest-bearing government papers. The introduction of this sovereign Sukuk has enabled the banks to diversify and mobilize stagnant capital."
The Sukuk also enjoyed high levels of demand because, "they are tradable and offer competitive returns to the investors," Asad said.
Al Meezan has built its position on the back of an extensive retail operation with more than 230 branches in 60 Pakistani cities. Asad said: "Since inception small retail investors have remained our focus. To extend our reach we have been using Meezan Bank branches as well as our standalone offices for the distribution of our funds."
The latest fund floated in partnership with Meezan Bank is the Al Meezan Capital Protected Fund-II. It's a closed ended fund following in the steps of the well-received Al Meezan Capital Protected Fund-I, which has been one of Pakistan's top performing since inception in 2008.
© The Islamic Globe 2011
