Kuala Lumpur – The strong growth of the Islamic finance sector is proving increasingly attractive to private equity (PE) and venture capital (VC) investors, new research* with leading Islamic finance professionals shows.

The research was conducted by IslamicMarkets.com, a leading platform that provides access to expert knowledge and financial opportunities, to support the Global Islamic Finance Forum 2022 (GIFF2022), 5-6 October in Kuala Lumpur.

The event, themed as ‘Take the Reins’, is organised by the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), in support of the Malaysia International Islamic Financial Centre (MIFC), and aims to generate an active discourse on the work required to strengthen Islamic finance’s global leadership.

More than two out of five (41 per cent) of Islamic finance professionals questioned, predicted a dramatic growth in PE and VC investments in the sector over the next five years with nearly half (49 per cent) forecasting a slight increase.

They believe the main attraction to PE and VC investors is the dramatic growth in the sector and its strong growth prospects for the future. But the fact that Islamic finance is an overlooked asset sector and is increasingly being recognised by non-Muslims is another key factor. Data** shows the market is worth more than USD$2.2 trillion and is predicted to grow between 10 per cent and 12 per cent this year.

Other key reasons for the interest of PE and VC investors in Islamic finance identified by the research include the increasing digitalisation of Islamic finance, which has helped to reduce costs, drive innovation, and improve transparency. The level of standardisation within Islamic finance is increasing, which is also attracting PE and VC investments. In addition, Islamic finance is very closely aligned with ESG investing.

GIFF2022 Chairman Arsalaan Ahmed said, “The Islamic finance sector has been on a strong growth path for years and that is increasingly attracting the interest of private equity and venture capital investors to the asset class. The Islamic finance sector is adapting rapidly to new technology and digitalisation, which is reducing costs and improving transparency, making the investment case much more attractive.”

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Research Methodology

  • *Research was conducted among 346 leading Islamic finance professionals working across sectors including banking, insurance, asset management, asset ownership, private equity, regulation and fintechs by IslamicMarkets.com during August 2022.
  • ** islamic-finance-outlook-2022-28102022v1.pdf (spglobal.com)

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