Egypt's EFG-Hermes plans Saudi Islamic fund as market opens up

The Saudi unit of Egypt's EFG-Hermes plans a fund to invest in listed Saudi sharia-compliant shares and initial public offers, hoping to benefit from the regulator's drive to increase institutional investment in the bourse.

Authorities will open the bourse to direct investment by qualified foreign institutions on June 15 as part of a strategic plan to raise institutions' share of activity in a market dominated by retail investors.

EFG-Hermes says nearly a third of its $3 billion of assets under management is in Saudi Arabia, with 1 billion riyals ($265 million) managed by its Saudi unit.

It obtained regulatory approval in May to launch the flexible, open-ended equity fund, named "Hasad". It is in the process of raising funds and expects to launch by end-June, said Majed Kabbara, director of asset management at EFG-Hermes Saudi Arabia.

"We are initially targeting a size of 50 million riyals but, with the huge interest in the Saudi market, we expect this size to exceed that of our conventional equity fund, which now stands at 117 million riyals."