Halic Leasing widens Turkey’s Islamic finance market
* Turkey is the world’s 17th largest economy with a predominantly Muslim population of 76 million
* The plans come after the firm’s new shareholders injected fresh capital at the end of last year
* Islamic finance in Turkey has been predominantly driven by domestic Islamic banks
Istanbul-based Halic Leasing is expanding its sharia-compliant business portfolio to tap demand from small businesses, the latest sign that Turkey’s Islamic finance market is growing beyond traditional banking services.
Turkey is the world’s 17th largest economy with a predominantly Muslim population of 76 million. Promoting Islamic finance is a part of government plans to boost commercial ties with the Gulf and diversify the country’s investor base.
Halic is building a portfolio of leased assets and is targeting new business of around $25 million by the end of the year, said General Manager Gokcen Sahin.
The firm also aims to attract further investments from Islamic mutual funds while expanding into construction equipment later this year, a sector which comprises around a quarter of Turkey’s leasing market, she added.
The plans come after the firm’s new shareholders injected fresh capital at the end of last year and set up a sharia committee to ensure its products follow religious principles such as bans on gambling, tobacco and alcohol.
“Some of our customers are very sensitive in this area – they want to be sure that our products and our funding resources conform to Islamic principles.”
Halic was established in 2004 by Kuwaiti investors but took new shareholders in October: Turkey’s Aktif Bank, the Saudi-based Islamic Corporation for the Development of the Private Sector (ICD) and Ijara Management Company.
Islamic finance in Turkey has been predominantly driven by domestic Islamic banks, known locally as participation banks, but sharia-compliant leasing could help tap into a large pool of SME businesses.
Most leasing transactions by Halic involve manufacturing equipment used by Turkish firms that supply the automotive, food, packaging and durable consumer goods sectors.
With a good quality portfolio, Halic may consider raising funds via Islamic bonds (sukuk) in the future, she added.
World Bank programme
Other Islamic finance efforts in Turkey have also picked up pace over the past year, including a World Bank programme aimed at providing long term Islamic financing for SMEs.
After a slow start in 2015, the programme had disbursed $147.9 million as of December from a total commitment of $250 million, according to a World Bank report.
In November, the ICD extended a $25 million medium-term Islamic financing to Calik Enerji, the energy arm of conglomerate Calik Holding.