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Libya plans to list first Islamic real estate fund by March

Under Muammar Qaddafi, who was overthrown in 2011, the growth of Islamic banking was not encouraged

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Libya will list by March its first real estate investment fund compliant with Islamic law, one of the arrangers said on Saturday, seeking to open up a new market in the North African country.

Libya plans to transform its banking and economic system to comply with Islamic law although officials have not set out a timeline for the process. Under a parliamentary ruling, interest payments must stop being paid out by 2015.

Under Muammar Qaddafi, who was overthrown in 2011, the growth of Islamic banking was not encouraged and four state-controlled institutions dominated the undeveloped financial sector of the OPEC oil producer.

A group of private firms will now launch a fund for 165 million Libyan dinars ($134 million) to target the country’s property market, said Husni Bey, head of HB Group, one of the fund’s launchers.

HB is one of Libya’s biggest private conglomerates distributing several Western brands as well as offering financial services.

“It will be a real estate fund...mixed of commercial, residential, industrial (property),” Bey told Reuters, adding that the fund will target a return of around 20 percent.

The fund will be listed in February or March on the small Tripoli bourse. The stock market confirmed the fund launch.

The government says it wants to attract foreign investment and develop the non-oil sector of the economy but is struggling to assert its authority against heavily armed tribesmen and militias, and parts of the country remain outside its control.

It has also been weakened by political wrangling with the Islamists who dominate parliament, the General National Congress (GNC), which strongly backs the plans to introduce Islamic law into the economy.

Some banking officials, technocrats and liberals privately fear a hasty transformation might add to the political turmoil.

($1 = 1.2350 Libyan dinars)