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Federated Investors Partners With Islamic Trade Finance

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Federated Investors (FII - Free Report) partners with the International Islamic Trade Finance Corporation (“ITFC”) to introduce a sovereign energy trade-finance portfolio — ITFC Sovereign Energy Fund — that would be designed in accordance with Islamic law. Though the company did not mention exact time of the launch, it is expected to happen sometime in 2018.

Federated Investors (UK) LLP would be providing strategic input to the ITFC Sovereign Energy Fund (“ISEF”), while funding and managerial functions will be carried by ITFC. The portfolio will be available to ITFC’s qualified investors as a private offering.

ISEF will invest primarily in energy-related trade finance, structured trade, export/import finance, supply chain financing and project finance assets of sovereign entities across the energy value chain in Organization of Islamic Coorperation (“OIC”) member countries. The portfolio aims to raise $300 million for its first close.   

ITFC was established with a view to facilitate trade development among OIC member countries by gaining better access to trade finance and providing them with the necessary trade-related capacity building tools, in order to boost their power to compete in the global market. Since 2008, ITFC has provided more than $40.2 billion of trade financing to the member countries.

Since 2014, both the companies have worked on a wide range of Islamic trade-finance transactions. Gordon Ceresino, president and CEO of Federated Investors (UK), remarked that the company looks forward to expand their relationship with ITFC by bringing Federated’s “specialized trade-finance expertise, deep understanding of risk management and all the experience of Federated’s global fixed-income team to investors pursuing attractive opportunities built on the highest ethical standards.”

In the last few years, Federated has inked strategic deals and thereby expanded operations in the United Kingdom and Chile. Notably, the company’s focus on expanding its business globally bodes well for the long term. However, consistent increase in expenses due to strict compliance measures remains a concern.

Shares of Federated have lost around 33% year to date compared with the nearly 6.7% decline recorded by the industry.

Federated currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the same space are Lazard Ltd (LAZ - Free Report) , T. Rowe Price Group (TROW - Free Report) and Virtus Investment Partners (VRTS - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lazard’s Zacks Consensus Estimate for earnings has been revised nearly 2.5% upward for 2018, in the last 30 days. Also, its share price has increased 24.9% in the past 12 months.

T. Rowe Price’s earnings estimates for the current year were revised 2.2% upward, over the last 30 days. Further, the company’s shares have jumped 47% in a year.

Virtus Investment’s Zacks Consensus Estimate for current-year earnings was revised 1.6% upward, over the last 30 days. Moreover, in the past year, its shares have gained 16.4%.

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