Crescent Finance is setting its sights on $5 billion of property transactions over the next five years, as it launches two new funds to invest in Islamic-compliant housing.
The two funds are Crescent Growth Fund and Crescent Finance Income Fund. Both will target 3% or over peer year.
"The growth fund will harness the leverage of the Crescent Income Fund which will take up to 70% of the property's value. As such, it will be a maximum of 70% leverage," Crescent Finance managing director Sayd Farook said.
"The basic approach to leverage here is that the income fund investors don't receive any capital gains on their investments. They will only receive their income and their capital back. As such, the Growth fund investors will earn all the capital gains proportionately alongside the actual end user customer - as such they will gain all the capital gains / losses," he said.
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The funds will be open to advised clients, SMSF investors and institutional investors.
Crescent expects to raise $100 million by the year end, and finance more than $5 billion of property transactions in the next five years.
Farook said the funds aim to meet the demand from Southeast Asia institutional investors, and to invest in property in an Islamic-compliant way. However, they are open to investors of all backgrounds.
"Crescent Finance - unlike other Islamic Finance institutions, plans to provide authentic structures whereby they co-invest funds that are not simply borrowed from a conventional bank at an interest rate and wrapped in legalese to make them appear Islamically compliant," said Farook, who was previously Thomson Reuters' global head of Islamic capital markets.
"Such providers have been around for many years and in effect are mortgage broking firms with a twist and do not pass the basic smell test on 'where did you get your money from?' Crescent Finance plans to answer that question decisively and transparently."
Crescent Finance was established in 2020 and is a part of Crescent Group which includes a $300 million Islamic superannuation fund.