does "Ittihad" mean?
Ittihad is an Arabic word meaning
Etihad Airways based in UAE (no affiliation)
Does Ittihad provide residential or commercial
Ittihad does not provide mortgages or
financing of residential or commercial properties. While we
do provide financial services to expanding, viable and
ethical business ventures, our services takes
place under a joint venture profit or loss model, or share
ownership basis (Sharika). Since there is no credit
involved, no ‘interest’ is charged by Ittihad
or remitted to investors. Ittihad earns a return on
their investment through either a dividend that the issuing
firm may or may not declare from time to time, and / or
through any capital appreciation of their shares.
are ‘Socially Responsible’ or Ethical Investments?
Socially Responsible Investing is a movement led by
investors, for other investors who pay more attention to
where their money is being ultimately invested. For many
investors, it is no longer good enough to know only the name
of their mutual fund holdings or stockbroker. They wish to
invest in businesses that bring something positive to
society and wish to align themselves with investment firms
that cater to this need.
As a simple example that assumes equal financial viability,
imagine a choice between investing in a company that
produces known toxins and another company that provides
toxin-cleanup services. We believe most people, if given a
choice, would choose to invest in the latter enterprise. The
problem they face however is that there are few forums where
they can make that choice and even fewer firms that will
help them identify such opportunities. Traditional mutual
funds, for example, do not allow investors to choose which
firms their money is invested in. Similarly, most brokers
and advisory firms do not have the freedom or know-how to
discriminate between firms that will benefit society and
firms that may ultimately bring harm.
At Ittihad, we neither encourage nor engage in business with firms involved in sectors such as
armaments, gambling, adult entertainment, alcohol and
tobacco. We look at potential investments from both a value
and financial perspective. This is more than just our
specialty – it is our very reason for being.
Islamic financing Socially Responsible?
Islamic (or Sharia) financing/banking
prohibits the collection of interest and trading of
finances, which is considered a form of gambling. Islamic
financing doesn’t allow investments into companies that are
unlawful and have no ethical or moral obligation to the
the benefit of dealing with Ittihad Capital Corporation?
Capital Corporation has built a strong foundation of
Socially Responsible Investments (SRI) with its clients. Its
mandate is to continue to provide interest-free solutions to
build continuous relationships for future growth of
its clients. With a highly motivated and skilled team, that
has an in depth knowledge and insight into the financial and
are the benefits of Islamic finance compared to conventional
benefits of Islamic financing are interest-free and social
responsible investments. Payments are fixed for the entire
term and cost-plus terms. As opposed to conventional
financing, there are minimal service fees and no interest
are some industries that Ittihad Capital Corporation
conducts business with?
Capital Corporation has done business in the industries of
healthcare, real estate, construction, transportation,
consumer products and financial service sector.
What are the benefits of Joint-Venture (Sharika)
finance as compared to conventional interest-based finance?
This is a question that invites much debate in financial
circles and academia. While we cannot do justice to the
debate by reproducing it here, we can nevertheless summarise
our view on the matter and let our investors decide.
Conventional interest-based loans or financing, at a
minimum, requires repayment of debt + interest. From our
perspective, the debtor and the financier have very
different incentives. As the incentive for the financier is
to ensure repayment (loan + interest) come what may, this
conflicts with the debtor’s ability to manage cash-flow and
expansion of the firm. In any negative cash flow period, the
debtor is left at the mercy of the financier, who can easily
recall the loan. At such a time, while loan repayment may be
possible after the sale of capital or real estate assets, it
may also result in premature bankruptcy. This would
literally evaporate any accumulated value in the business as
relationships are sundered, people are left unemployed and
productive assets are sold for pennies on the dollar. In
this way, although the debtor bears all business-risk, the
financier is the one that enjoys the reward.
On the other hand, if this transaction is built as a joint
venture, we manage to better align the incentives of the
parties involved. The firm that requires capital raises
money directly from investors by selling them a part of the
business. Both the business and the investors have an
incentive to grow the business. Neither party has the
ability or the incentive to prematurely call a loan, enforce
a buyout etc. Both parties share in the profits or losses of
the business, bearing a more equitable distribution of both
risks and rewards. Negative cash flow periods that are
transitory do not automatically trigger bankruptcy,
ultimately allowing for a hardier and more sustainable
business. From the perspective of our investors, they make a
choice to invest in a debt-free business as opposed to
The other benefits relate to the impermissibility of dealing
in ‘interest’ (a kind of Riba) for members of the
Islamic faith, members of some Christian denominations and
also members of movements such as LETS, Social Credit etc.
For people that are members of such groups, our profit and
loss sharing model is a viable method through which they can
put their hard-earned savings to work.