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| Presentation of the certificate for shari'ah compliance. From left: Mohamed Hanif Zakariah, General Manager, Pergas Investment Holdings, Associate Professor Dr Hikmatullah Babu Sahib, Shariah Committee Member of FSAC, Gary Tom, President Asia, Walton International Group and Felix Tang, Senior Vice President, Operations, Walton International Group. |
The Walton Group of Companies (Walton), a multinational privately-owned real estate investment and development group which concentrates on land in North America, has announced that its business model and investment products have been endorsed by the Financial Shariah Advisory and Consultancy (FSAC) of Singapore.
FSAC, one of the entities under Pergas Investment Holdings (PIH), assisted in the endorsement as Pergas has dedicated advisory expertise focusing on structuring investments to align with shari'ah principles. PIH is the business arm of Pergas, the Singapore Islamic Scholars and Religious Teachers Association, and a non-profit organisation that is much-respected by the Muslim community for advice not only in daily and religious affairs, but also advice on investments.
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| Source: Walton International Group. From left: Mohamed Hanif Zakariah, General Manager, Pergas Investment Holdings, Dr Shamsiah Abdul Karim, a member of the FSAC Shariah Panel, Ustaz Pasuni Maulan, Vice Chairman of Pergas Investment Holdings and part of the FSAC Shariah Panel, Associate Professor Dr Hikmatullah Babu Sahib, Shariah Committee Member of FSAC, Gary Tom, President Asia, Walton International Group and Felix Tang, Senior Vice President, Operations, Walton International Group. |
Gary Tom, President, Asia of Walton International Group, said the Pergas endorsement "is important as some of our clients are Muslims and they can now be reassured that our investment products arc shari'ah-compliant." According to Tom, Walton's philosophy is aligned to shari'ah law, which emphasises that business is conducted in a just and ethical way.
Walton takes a long-term and disciplined approach to land development and real estate investment. Walton, whose Singapore office is celebrating its 20th anniversary this year, currently has US$5 billion worth of assets under management in North America, and has a good track record in providing solid returns, he said.
The Walton business model is to buy land and then develop it, getting the necessary approvals and then erecting buildings and putting in essential infrastructure such as roads, water pipes and wiring for electricity. The company will also maintain the infrastructure, and is currently managing 22 development projects in Alberta and Ontario in Canada, as well as in Washington DC, North Carolina, Florida, Texas and Colorado in the US. The projects are varied, from technology parks to commercial buildings and residential areas.
"We don't just buy any property in any location – there is research and due diligence to identify the best lands that have the highest potential. We want to be the dominant land holder in the area as we can then invest the most. We need partners, co-owners to be the dominant land holder," Tom explained. "We don't run out of capital with a co-ownership structure."
The co-ownership arrangement is not short-term, nor speculative, Tom added. The average hold duration of the asset is 8.45 years, yielding an average internal rate of 12.47% and average realisation multiple of 2.41x.
"It is not something to take lightly or something that has been an overnight success. We believe in a simple investment, a transparent investment. A business doesn't have to mean taking advantage and squeezing the last ounce of profit," said Tom. "But we also believe in selecting the right business partners."
The decision to seek shari'ah-compliant endorsement was taken in 2015. Tom said that Walton has been involved in the Muslim community in Singapore since 2003, participating in various outreach events with Berita Harian, Halal-U and Critical XChange Singapore (CRIX). "We want to engage with the community and have transparency with the community," he said. "Our values are similar: transparency and simplicity of investment, and involving benefit to the community... Today just seems like the natural progression, the natural step that was started with our Walton colleagues many years ago. Our understanding is that the Walton products are compliant with the Islamic teaching for a socially responsible investment product."
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| Walton's shari'ah endorsement is based on land being a preferred assset in Islam; that the investment structure meets shari'ah parameters; and the investment structure is considered in the context of Muslims living in Singapore. |
Mohamed Hanif Zakariah, GM of PIH, shared that FSAC is the PIH arm focused on creating awareness about Islamic finance. "Our priority is to provide a holistic financial shari'ah support system to individuals and partners, delivering or basically finding out what are practical and permissible solutions unique to the Singapore context," he said. "We always on the lookout for key partners. We consider Walton one. Their business model is very community-centric."
Associate Professor Dr Hikmatullah Babu Sahib, a member of the FSAC Shariah Panel, likened the seeking of shari'ah compliance in doing business with Muslims to getting a driving licence before driving a car. He noted that Walton had "taken the bold step of reaching out to the Muslim community and taken the right step of asking our approval".
"The underlying assets they own are halal and stable," he said. "Walton has generally met with certain shari'ah principles, and conformed to the spirit and substance of shari'ah."
Under the exhortation to "Make it easy for them and do not make it difficult for them"* the FSAC Shariah Panel has made the decision easier for both investors and the committee and given Walton the seal of approval for both its business model and its products, Dr Hikmatullah said.
"The ethics and the legality were scrutinised," he said. "Walton met the criteria we have set for approval. The underlying assets are halal, because land is by virtue a halal asset. The lands are generally owned by Walton. There is no doubt about the legality of the land. Given the constraints that they have according to the law of the States - we have to take into consideration those legal issus without unduly imposing too much hardship on the business to take."
Suryana binte Safie, VP of Sales, Walton International Group, elaborated that all land in the US must be insured by law, and that the land title insurance is done by First American Title Insurance, which is not takaful.
"There is no land title insurance (that is) Islamic in North America yet, (so FSAC) had this dispensation to engage First American Title Insurance," she said. "If (there is) in future takaful to insure land, then Walton should (work with) the takaful."
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| Suryana. |
Walton's clients in Singapore and Malaysia account for 5.2% of the overall global client base of 100,000 investors. Tom said there are 22,000 investors in Singapore, and that China, Malaysia and Japan are also major markets for Walton.
Tom added that the decision to obtain shari'ah compliance is about supporting communities where Walton is already present, rather than to develop Islamic products. Walton's next steps, he said, will be to work on building awareness with partners in the light of the compliance.
*"..make things easy and do not make things difficult..": عَنِ ابْنِ عَبَّاسٍ عَنْ النَّبِيِّ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ أَنَّهُ قَالَ عَلِّمُوا وَيَسِّرُوا وَلَا تُعَسِّرُوا وَإِذَا غَضِبَ أَحَدُكُمْ فَلْيَسْكُتْ
2137 مسند أحمد وَمِنْ مُسْنَدِ بَنِي هَاشِمٍ