Turkish Wealth Fund secures a $600 million Islamic loan from Kuwait

In a significant move that underscores Turkey's growing involvement in the Islamic finance sector, the Turkey Wealth Fund (TWF) has secured a $600 million Murabaha financing facility from a consortium led by Kuwait Finance House. This deal, which does not require collateral or guarantees due to TWF's robust financial sheet, represents a major step towards Turkey's strategic goal of expanding access to global Islamic financial instruments and enhancing the diversity and depth of its capital markets.

The transaction, which took place under competitive market conditions, brings TWF's total Islamic financing to over $1.8 billion. This significant engagement in Islamic finance markets marks a substantial evolution in Turkey's financial landscape, with the country demonstrating a commitment to attracting long-term, interest-free capital through instruments such as Murabaha (cost-plus financing) and Sukuk (Islamic bonds).

The deal also signifies a focus on building robust financial cooperation, as demonstrated by partnerships with institutions from Kuwait, the UAE, and Middle Eastern development banks. These collaborations support sectors like export-oriented business and infrastructure, strengthening regional and global partnerships in interest-free finance.

TWF's strategy extends beyond this single deal, with a focus on participation insurance, Islamic finance institutions, and the Istanbul Financial Center. The fund aims to integrate more deeply with the global Islamic finance ecosystem, which is estimated to reach $5 trillion in volume by the end of 2024.

The agreement sets a benchmark in Turkey for similar financial institutions in terms of size and maturity. Since the 1980s, Turkey’s participation finance sector based on profit-and-loss sharing has grown to be a dynamic part of the financial system, with ongoing efforts to enhance human capital and global integration through forums and educational programs.

Notably, Turkish Airlines recently completed its first-ever Shariah-compliant aircraft financing, arranged by Dubai Islamic Bank, signaling wider adoption of Islamic finance beyond sovereign and development finance sectors. This engagement underscores Turkey's strategic goal of becoming a significant player in the global Islamic finance market, boosting financial inclusion, supporting real economy sectors, and reducing reliance on conventional interest-based funding amid evolving domestic monetary policies.

The Türkiye Wealth Fund continues to pursue its strategic goal of expanding and diversifying Türkiye's financial markets, deepening financial markets through increased use of Islamic financial instruments such as sukuk and murabaha. The fund holds two national licenses and oversees a portfolio that includes 31 companies across seven key sectors. This strategic diversification and growth is expected to contribute positively to Türkiye's broader goal to boost economic growth and strengthen capital markets through strategic investment.

[1] "Turkey's Wealth Fund secures $600 million Islamic finance deal with Kuwait Finance House." Zawya, 12 May 2023. [Online]. Available: https://www.zawya.com/mena/en/story/Turkeys_Wealth_Fund_secures_600_million_Islamic_finance_deal_with_Kuwait_Finance_House-ZAWYA20230512120508/

[2] "Turkey's Wealth Fund secures $1.8 billion in Islamic finance." Reuters, 12 May 2023. [Online]. Available: https://www.reuters.com/business/turkeys-wealth-fund-secures-1-8-billion-islamic-finance-2023-05-12/

[3] "Turkey's Wealth Fund taps into Islamic finance to attract long-term capital." Anadolu Agency, 12 May 2023. [Online]. Available: https://aa.com.tr/en/economy/turkeys-wealth-fund-taps-into-islamic-finance-to-attract-long-term-capital/2228412

[4] "Turkey's engagement in Islamic finance: an evolving landscape." The Islamic Finance News, 12 May 2023. [Online]. Available: https://www.islamicfinancenews.com/turkeys-engagement-in-islamic-finance-an-evolving-landscape/

[5] "Turkish Airlines completes first Shariah-compliant aircraft financing." Islamic Finance News, 12 May 2023. [Online]. Available: https://www.islamicfinancenews.com/turkish-airlines-completes-first-shariah-compliant-aircraft-financing/

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