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An Islamic financial house has launched a £10mn trade finance fund for UK halal imports.

Umex Securities, a division of Umex Capital Markets, intends to roll the ‘Trade Bridge’ model out to other European markets, to capitalise on demands from SME traders who are often too small for mainstream Islamic financial products.

Group CEO Mahesh Jayanarayan tells GTR that while large conglomerates active in the halal sector such as Nestle can take advantage of Islamic finance products, there is nothing for those further down the chain.

He says: “There is no such thing as a halal trade finance opportunity for small business; there are Islamic structures but nothing for the SME. There are four or five banks that do Islamic structured finance but they’re mostly done in the property or energy sectors. So the market is devoid of such funding.”

The fund will cater mainly for importers of halal foods, as well as toiletries and pharmaceutical products which Jayanarayan describes as a “growing portion of the halal trade in the UK and Europe”.

The ticket sizes will be between £50,000 and £250,000. Eligible deals will have to satisfy stringent sharia-compliance criteria at every stage of the supply chain, from originator to buyer.

The deals will be on a short-term basis, with 15 to 120-day tenors, with Umex keen to use the model in other European countries with large Muslim catchment areas, such as France.

Jayanarayan explains: “There is tremendous demand outside the UK. We want to get the model right and practiced and functioning right. Even the backbone of the infrastructure has to be sharia-compliant so we will wait to see how this model works and then franchise the model.”