Oil pipe line valve in front of the Saudi Arabia flag on the oil barrels.
Wahed, the ethical investment fintech for Muslim investors, raised $25 million in venture funding with proceeds being funneled into ensuring people can invest their money into a diversified portfolio consisting of stocks, commodities, real estate and sukuk, the latter being Halal-focused asset ownership certificates.
Sharia law forbids those of Islamic faith from paying or earning interest and engaging in what could be considered as unethical investments. The world’s 1.8 billion Muslims have until recently been underserved by the financial institutions in Europe, and this is where online robo-advisors like Wahed come in.
Fintech players that do consider Sharia law ensure that customer assets will not be invested in usurious companies that deal with tobacco, alcohol, firearms, gambling or pornography, which can also align with ethical, social and governance (ESG) requirements.
Conventional finance has a problem with transparency and fairness. There are 1,407 Islamic financial institutions globally, from retail to investment banks and asset managers. The 2017 ICD-Reuters report put the Islamic finance industry at $2.2 trillion of assets in 2016 and forecast that it would grow to $3.8 trillion of assets by 2022.
The funding round led by Saudi Aramco Entrepreneurship Ventures, also known as Wa’ed Ventures, a venture capital investment arm of global petroleum and natural gas company and existing investors BECO and CueBall Capital, as well as Dubai Cultiv8 and Rasameel, is notable given the Covid-19 pandemic has destabilized private capital markets and decimated the fintech investment market.
But with ethical investment and Islamic finance growing in popularity and people taking an interest in securities that are in line with Islamic ethics, ensuring that usurious companies are not funded, Saudi Aramco were wise to invest in a fintech firm that has been dubbed the world’s first Islamic finance company.
“The Muslim investor has a specific requirement that prohibits them from keeping their excess savings in bank accounts,” said Junaid Wahedna, Group CEO of Wahed. “Banks utilize deposits to lend money for interest which is proven to increase inequality and cause an unfair advantage to the wealthier borrower, whilst charging a high interest fee for lower income consumers.”
Wahed has experienced incredible demand, not only in the MENA region but globally. With Saudi Arabia’s young population that are born digitally-savvy and practicing religion, the fintech organization have high hopes for development of the company’s subsidiary in this country in line with the KSA’s Vision 2030 that looks to be the investment powerhouse and thriving economy that connects three continents.
Since launching in 2017, Wahed was recently awarded the first RoboAdvisory permit by the financial regulator, the U.K.’s Capital Markets Authority (CMA), to launch its platform in KSA.
Tapping into the rising demand for Islamic and ethical investments, a sector that merges Sharia law and modern investment theory hasn’t hurt. Wahed have created an easy to use global platform, with free portfolio recommendation and no hidden fees, available through a mobile app and accessible in the U.S., U.K., and Malaysia.
Wassim Basrawi, Managing Director at Wa’ed Ventures, made the following statement: “We believe in Wahed’s mission to provide ethical investing. The company has taken the lead in delivering investment services to one of the world’s fastest growing sectors – Islamic finance.
“Wahed is also, in the true spirit of fintech, helping to broaden the investment landscape. This latest funding round will enable Wahed to make Saudi their regional MENA hub and contribute towards a fast-growing fintech ecosystem.”
Wahed’s foray into Malaysia in 2019 bolstered their global presence, and the fintech firm now serves over 100,000 clients globally, with growth plans for the largest Muslim markets including Indonesia, Nigeria, India and the CIS.
Wahedna believes that they are paving the way for ethical investment in Islamic finance and showing the world how underserved the Muslim market is. He adds that there is no doubt that Wahed’s growth will motivate local players to launch similar offerings. “We welcome efficiency in our industry as the end customer should always win without having to pay an unnecessary cost for investing in line with their ethics.”
This content was originally published here.