Unlocking Islamic Finance

In searching for new investment products, Islamic banks and their shari'a boards have found a natural fit with project finance. In project finance, the success of your loan is tied in with the success of the project, as opposed to a conventional loan, where the success of the venture is nearly irrelevant. Islamic finance principles call for exactly this -the sharing of risks as well as rewards. While Islamic finance meshes well with project finance, industry watchers don't expect projects costing more than $200 million to be financed by Islamic funds alone. Given the capital requirements of many deals, especially those in the Middle East's oil and gas sectors, most will need to combine Islamic tranches with conventional financing. Islamic banks in the Middle East and Asia have quickly found a permanent place for themselves in the world of project finance. The growth of Islamic finance has been a natural development, and despite some growing pains, it will continue at a healthy rat