Sydney-based residential developer Piety Investments, a shariah-compliant fund manager, has secured an A$100 million ($76.3 million) investment from Middle Eastern fund Crestmount Capital.
Crestmount Capital is a portfolio company of KBW Investments managed by Prince Khaled bin Alwaleed bin Talal, a member of the Saudi Arabian Royal family. He is the son of Prince Alwaleed bin Talal al Saud, chairman of Saudi Arabian investment major Kingdom Holding Company. The development was initially reported by the Australian Financial Review.
KBW Investments, based in Dubai, works across a sectors including construction, manufacturing, engineering, property, project management, automation, technology, finance, and hospitality.
According to its website, Piety Investments “specialises in structuring and managing Shariah compliant investment funds across both residential development and commercial real estate within Australia.”
While recent years have seen Chinese investment shape the Australian property market, it has not been impacted by Middle Eastern funds. This is due to requirements that see Middle Eastern funds needing to be shariah-compliant, coupled with the fluctuations in value experienced by Middle Eastern currencies relative to the Australian dollar, that render such transactions outcomes difficult to predict.
The capital from Crestmount Fund I is to be deployed into five separate Australian Sharia-compliant projects, which are residential developments.
“Crestmount Capital is KBW’s flagship entry into the Islamic finance segment. Having explored a variety of investment vehicles and types, the company’s interest has now increasingly turned to activating our existing strengths in finance to work for the advantage of the sophisticated Islamic investor,” said Prince Khaled.
Shariah-compliant investments stay away from domains linked to alcohol, pornography and gambling. They are also required to specific audits and formats. This leads to Middle Eastern investors target investments in property, logistics and industrial assets that are stable and possess long lease terms.
Piety Investments is partnered with joint-venture residential development entity TH Properties (THP), a Malaysian integrated property, project development and asset and facilities management group owned by the Malaysian government’s Lembaga Tabung Haji (Pilgrims’ Fund Board).
Piety and TH Properties explain they have structured a mezzanine-type deal for Crestmount that will enable it to invest in a basket of projects with differing life cycles, permitting it to hedge against volatility.