Shamil Bank, a leading Bahrain-based Islamic commercial bank and a wholly-owned subsidiary of Ithmaar Bank, announced yesterday (ed note: 18/11/09) that its ‘Shamil China Realty Modaraba’ has distributed another US$3.5 million as capital returned. This is in addition to the US$6.6 million distributed during the first half of 2009.

“Given the turbulent economic conditions of 2007-2009, we are extremely proud to announce that our landmark Shamil China Realty Modaraba has continued to perform well in the current economic crisis,” said Shamil Bank Chief Executive Faisal Al Alwan. “The Modaraba’s success is mainly due to China’s stable economy that has sustained its momentum despite the general downturn, as well as the key decision-making capabilities of the Investment Manager (CIAM-Shamil Assets Management Ltd.). With this most recent distribution of US$3.5 million, the Modaraba has returned a total of more than 43 percent of the principal,” he said.

“During 2009 alone, the Shamil China Realty Modaraba has returned more than 22 percent of the principal through three distributions,” said Al Alwan. “The Modaraba’s continuing success is a further testimony to Shamil Bank’s resilience to even the most challenging market conditions,” he said.

The distributions of the Modaraba are a result of the proceeds received from the partial exit of three underlying investments in China.

Earlier this year, Shamil Bank announced that it had distributed a total of US$10.6 million, in capital repayments till January 2009.

Launched in early 2006, the US$51million Modaraba marked Shamil Bank’s entry into China, and was the first ever Islamic property fund for investment in the Chinese real estate market. The Modaraba targeted investments in the rapidly expanding real estate sector of China, which was driven by demand for better quality housing and commercial space. Investments were made through Xuan Huang China Realty Investment Fund Limited, a joint venture between Shamil Bank and CITIC Group, a major state owned Chinese conglomerate with total assets in excess of US$86 billion.

CIAM-Shamil Assets Management Limited, owned by Shamil Bank and CITIC Group, acted as the Investment Manager and sourced transactions that met the Fund Company ’s stringent investment criteria.