Founded in 2009, Sidra Capital is a pioneer of private Islamic finance in Saudi Arabia, with offices in Riyadh, Dubai, Singapore and London. Licensed and regulated by the Saudi Arabian Capital Market Authority, Sidra’s Shariah-compliant asset business focuses on alternative asset classes, real estate and private finance and private equity.
Under chairman Hani Othman Baothman, the firm offers corporate restructuring, financial advisory and asset management services for high net-worth individuals, privately owned companies, family offices, foundations and governments.
The firm launched the Sidra Income Fund II in October. What it lacks in scale, with assets of around $100 million, it makes up for in market impact. The fund is a dollar-denominated investment vehicle focusing on commodity export trade within the Asia-Pacific region. It focuses on the export of branded solid fuel from Indonesia to trading houses and end users in India, China, Singapore and Malaysia.
Sidra’s fund facilitates commodity supply-chain transactions with fully funded and irrevocable letters of credit. By securing trades end to end via US dollar-denominated agreements issued by banks with strong credit ratings, investors are protected against foreign-exchange and payment risk.
Sidra also uses Islamic structuring, employing the wakala principle, under which an agent is given the authority to trade commodities using a depositor’s capital based on certain criteria.
Baothman argues that the structure is a testament to Sidra’s ability to source private finance opportunities globally and to create investment solutions that connect capital providers and users. The fund also mitigates the inherent risks in such structures. Its private finance solutions have a low correlation to other asset classes, generate consistent returns with low volatility and invest in the real economy with no leverage or speculation. This encourages social and economic development in the markets where Sidra operates.
For Sidra, the fund addresses its goal of becoming a bigger presence in southeast Asia’s booming economies. By closing the trade finance gap and reallocating capital from the Middle East to regions where capital is direly needed, Sidra is playing a positive role in social and economic growth internationally.
