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Figure 3: Why Choose Bermuda for Sha- riah Compliant Investments?
Bermuda has longstanding and solid regulatory standards which makes a perfect platform for Shariah compliant investments
Bermuda is a world leading financial centre promoting transparency and cooperation which is perfect for Islamic finance
Bermuda is the prime jurisdictions for Sukuk issuances especially in aircraft financing
Bermuda holds attractive opportunities in Takaful and Retakaful sectors
Bermuda has Tax neutrality compliant with Shariah financing principles
Bermuda is in the prime location amongst major western financial hubs such as the United States
Bermuda has a solid portfolio of trusts and a wealth of partnerships around the world
come from various other Islamic financial hubs such as the UAE are already investing in the opportunities that Bermuda holds. There is a variety of sectors one could venture into in Bermuda as outlined in Figure 2.
Figure 2 identifies the sectors of Islamic finance that you could invest in Bermuda and see lucrative profits from as Bermuda has a thriving Sukuk and Takaful sector with laws that accommodate Sukuk issuances and pave the way for Islamic insurance. In addition Bermuda’s infrastructure and real estate sector is thriving and it has extensive human capital and resources which could lead to bigger and better opportunities for investors in a safe and secure environment such as Bermuda.
Why should an Investor Choose Bermuda- for Islamic Finance Opportunities? There are countless reasons why an inves- tor should choose Bermuda for a potential investment and GIF will outline in Figure 3 some of the main reasons why you should consider Bermuda for your next project, ven- ture or investment in the Islamic finance and banking industry.
Bermuda Supporting the Islamic Finance Sector
Sukuk Sukuk Islamic bonds are seeing an unprece- dented growth in Bermuda and it is becoming an avenue of Islamic finance that is spurring success. Bermuda has implemented ways to securely accommodate and satisfy investor needs in Sukuk drawn from securitization transactions and recent Sukuk. The recent Sukuk issuances indicate that rating agen- cies are satisfied with the corporate laws of Bermuda which have made Sukuk highly ac- cessible and favourable within the country. It
44 Global Islamic Finance May 2012
is also a well placed location for Sukuk when assigning ratings to transactions involving issuers in Bermuda.During the structur- ing process of Sukuk in Bermuda investors were aware that there are several countries to choose from which various different tax regimes have and the tax-efficiency of the underlying vehicle is imperative in the use of special purpose vehicles (SPVs).
Bermuda therefore is a location which can give the investor security in making Sukuk issuances as it is one of the world’s leaders in the provision of offshore SPVs. In addi- tion Bermuda benefits from a long history as an offshore jurisdiction used in financial transactions involving US companies. It is also reported that when GE Capital tapped the Sukuk market in 2009 with a $500m Sukuk,the SPV holding the assets wasa Ber- muda exempt limited liabilityCompany which saw lucrative returns.
In addition to the ability to form tax-efficient SPVs, Bermuda has built into its regulatory environment the ability to facilitate offshore listings effectively and cater for the avid in- vestor, whether it is the primary or secondary source for Sukuk. The listing requirements of the Bermuda Stock Exchange require a local paying agent and approved company for clearing and settlement and it is impor- tant to note this when thinking of making a Sukuk issuance in the country. Bermuda is currently pursuing efforts to become the first Western hub for Islamic finance as it is in a favourable tax domicile.
Business Bermuda CEO Cheryl Packwood and Apex Fund Services’ Peter Hughes said that “The island was actively seeking to tap into the trillion dollar industry”. Ms Pack- wood said that the “continual growth of Is- lamic finance and stronger ties with Bahrain
and Malaysia led to a focus on developing existing Bermuda legislation more than 18 months ago”.
“We now have strong links in Bahrain and there is a commonality of wanting to create a niche jurisdiction for Shariah compliancy, that is closer to the US time zone,” she said. “We are also focusing on Kuala Lumpur in Malaysia, as it has an enormous Sukuk market. The process for getting this off the ground may be slow but we have the Ber- muda Monetary Authority and the Bermuda Stock Exchange behind us.”
Bermuda’s popularity as a domicile for Su- kuk issuers is increasing from the time of the GE Sukuk which was the first ever Su- kuk to be issued by a Fortune 500 com-
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