By Simon Jessop
LONDON (Reuters) - Ethos Invest plans to raise 1 billion pounds ($1.39 billion) for what it said would be the world's biggest Sharia-compliant fintech-focused private equity fund, the British asset manager said on Tuesday.
The Ethos Financial Services & Technologies Fund aims to target small and medium-sized firms, including in the UK, Europe, the Middle East, Asia and North America in the financial services, technology and related sectors.
Seeking companies which align with the principles of Islamic finance, the fund will also tap into the broader and growing market for ethical investments with a particular aim to boost financial inclusion.
"There's a real lack of capital being invested in companies like this," Ethos Invest partner Quintan Wiktorowicz told Reuters.
It will focus on companies between $50 million and $200 million in size in areas including banking, asset management, payments and life sciences, using technology including blockchain, robotics and cyber security.
As well as helping companies in Muslim markets with ethical products and services access the broader global market, the fund would also look to help Western firms go the other way, Wiktorowicz said.
"There are a lot of companies, particularly in the West, that are operating in a Sharia-compliant manner, but maybe don't recognise it as such."
"They have good products and services that would be very appealing to a Muslim customer base, but they really haven't entered those markets in force, even though they could."
The fund aims to do the first close of its capital raising in four months and complete it within 12 months, Wiktorowicz said.
Islamic finance, which bans interest payments and pure monetary speculation, is a $2.2 trillion global industry, but remains a fragmented sector with uneven implementation of its rules.
S&P Global (NYSE:SPGI) Ratings has estimated the industry will grow by 10%-12% over 2021-2022, after growth of 10.6% in 2020 and 17.3% in 2019.
Ethos will work with BMO Global Asset Management's private equity team as investment advisers for the fund, alongside Saudi Arabian investor the Al Inma Investment Company, which will act as partner in the Kingdom and across the Middle East.
Ethos said it plans to launch additional funds across a range of sectors and move into digital banking and wealth management.
($1 = 0.7194 pounds)