A new shariah-compliant trade finance fund has launched and is “expected to make the first investment within the next two weeks”.

EIIB-Rasmala is a joint venture between the European Islamic Investment Bank and Rasmala Group, a Dubai-based financial Institution.

The fund’s head of asset management Eric Swats tells GTR that “the focus will be on self-liquidating commodity trade finance transactions which are typically over-collateralised and [in which] the underlying commodity is traded on an exchange”.

The fund hopes to capitalise on the demand among investors to put their money in low risk, long-term assets.

Domiciled in the Cayman Islands, the fund is hoping to attract US$100mn over the next year. Swats hopes to offer investors a return of 4%.

He says that rather than leading deals alone, EIIB-Rasmala will join syndicates and club deals. He continues: “Initially we will work with established players in the trade finance market but ultimately we envision a balance between transactions self-originated transactions and syndicate participations.”

The trade finance fund is the latest of three funds the pair have launched together, adding to the leasing fund and sukuk fund seeded with US$25mn of the JV’s own capital.