Leading Gulf Islamic investment company GII takes a majority stake in pioneering UK bridge finance provider OFFA

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June 30, 2022

Britain’s first Sharia-compliant short-term bridge finance provider OFFA is setting its sights on major expansion after securing a multi-million pound investment from the UAE’s Gulf Islamic Investments (GII), which has taken a 51% stake in the start-up. The funding will enable OFFA to deepen and broaden its presence in the UK’s Islamic property bridge finance market, which is estimated to be worth £500m annually.

OFFA’s senior team already includes some of the most experienced names in UK Islamic finance, namely Executive Chairman Sultan Choudhury OBE, who founded Al Rayan Bank, Chief Financial Officer Amir Firdaus, who launched the UK first ever public Sukuk (Islamic bond) worth £250m, and Chief Commercial Officer Sagheer Malik, who developed a multi-channel distribution of more than £1bn of Sharia compliant property finance. 

Formed in 2019 by property mogul Bilal Ahmed, OFFA aims to meet the unfulfilled demand from British Muslims, who require finance for their property purchases in accordance with their faith. The Birmingham-based start-up quickly demonstrated its proof of concept, completing dozens of deals and garnering financing opportunities totalling £178m. OFFA’s successful penetration into the UK’s £6bn* bridge finance market attracted a variety of suitors, GII chief among them. The global investment house, which lists UK interests among the $3bn assets it manages, including property on Bayswater Road, London, and the Lewis Building in Birmingham, recently concluded its deal with OFFA after nine months of negotiations.  

Remarking on their majority stake in OFFA in a joint statement, GII Co-CEOs Mohamed Al Hassan and Pankaj Gupta said: “Gulf Islamic Investments has a track record of investing in high growth businesses in the financial and real estate sectors. We are delighted to back OFFA, a flourishing Sharia-compliant finance house with huge potential.” 

The GII investment will be used to develop OFFA’s IT infrastructure and staff recruitment, as the firm gears up for the launch of Sharia-compliant retail and commercial bridge and long-term finance products in 2023. The funding, coupled with new credit lines and products, is projected to help OFFA’s assets portfolio to grow to $1bn over the next five years. 

“We are delighted to secure this significant investment from GII. The deal, which was nine months in the making, shows confidence in the UK’s Sharia-compliant short-term real estate financing market. This funding boost will lead to an expansion in both our asset book and product set, that should see us hit $1bn by 2027. Exciting times ahead,” said OFFA CEO Bilal Ahmed, who has over 20 years’ experience in property and bridge financing.

OFFA puts the value of total addressable UK Muslim property finance market, including home finance, at £10bn. There is also growing demand for better Islamic finance products and services from the UK’s 4 million** strong community. Research shows that 4 in every 5 Muslims in Britain*** use or would consider using Islamic finance. 

While the vast majority of OFFA’s customers are Muslims, a sizable percentage, 28%, are non-Muslims, drawn to its alternative ethical funding model that replaces interest with a transparent mark-up and avoids draconian measures if the borrower gets into financial difficulties. On average, OFFA has provided short-term finance worth £395K, representing 61% of the property’s value.

Commenting on the importance of the GII investment deal, OFFA chairman Choudhury said: “It’s fantastic to find a partner that supports our thriving business and shares our values. The sky really is the limit for OFFA, as demand for our services rocket and our talented team continues to innovate. There is massive potential in the post-Brexit era, allowing Sharia-compliant financial services to achieve year-on-year growth in Britain.”

The UK has become firmly established as one of the world’s leading centres of Islamic finance. It has already overtaken Malaysia as the world’s top Islamic fintech destination****. The UK’s four domestic Shariah-compliant banks collectively hold £4bn of Net Assets with just 2% market penetration.  Globally, Islamic finance houses and institutions hold assets worth more than $2.4 trillion*****, with the sector experiencing double digit growth for much of this past decade. 

The corporate finance advisors that oversaw GII take a stake in OFFA were Cattaneo PLC, with Shakespeare Martineau serving as the legal advisors for OFFA. 

NOTES 

*According to an EY Bridging Market Study, the UK bridge finance sector turned over £6bn in 2021.

** There are an estimated 4.13 million Muslims in Britain, according to ‘Islam in the UK – Statistics & Facts’, Aug. 2021, statista.com. 

***Research by 2Europe shows 81% of British Muslims either currently use or would consider using Islamic finance. 

**** IFN FinTech,a global network representing fintech’s Islamic segment, recorded 142 Islamic fintechs around the world in July 2020: 27 fintech start-ups are in the UK, 19 in Malaysia, 15 in the UAE, 13 in Indonesia, and 9 each in Saudi Arabia and the USA.

***** Islamic finance: $2.4 trillion global assets, according to the Islamic Financial Services Industry Stability Report 2020.

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