The Securities and Exchange Commission of Pakistan (SECP) has authorized Eman Management Pvt Ltd (EMPL) to float Orient Rental Modaraba, with capital worth Rs500 million.
The modaraba certificates will be listed on the Pakistan Stock Exchange. Certificates worth Rs350 million will be subscribed by EMPL, ASJN Holdings Pvt Ltd, associates, and sponsors. The remaining certificates worth Rs150 million will be offered to the public.
Orient Rental Modaraba will be perpetual and multipurpose, providing rental equipment solutions, operations, and maintenance services to its customers on ijarah basis. The rental equipment includes construction machinery, power generation equipment, material handling equipment, and commercial vehicles.
The transactions of the modaraba will be on the basis of risk and profit sharing. The modaraba shall not engage in riba-based transactions, and will operate in accordance with Sharia Audit and Sharia compliance mechanism.
The move signals a growing interest in Islamic finance, particularly in the modaraba sector, by prospective investors, as this is the second authorization by SECP in quick succession to float a modaraba. It is expected to further enhance investment in Islamic financial institutions in the country.
The modaraba is a trust financing contract in which the financier (rabb-ul-maal) provides capital to the working partner (modarib) to invest in an enterprise, and any resulting profit is shared between the two parties according to a pre-determined ratio.
The concept of the modaraba gained popularity in Pakistan in the early 1980s when the government adopted a policy to promote Islamic finance at the national level. The Modaraba Companies And Modaraba Rules, 1981, regulates modaraba-related activities in the country.
Source: The Nation
Picture credit: The World Portfolio
