Banking & Finance

Fractional sukuk platform launched by UAE bank

April 22, 2025, 5:48 AM

ADIB says its new sukuk platform "makes ethical, fixed-income investing easier and more inclusive”

ADIB reveals ‘Smart Sukuk’
Platform targets retail investors
Direct ownership for $1,000

Sukuk investing in the Gulf has long been the preserve of institutional and wealthy investors because of a six-figure minimum investment threshold, effectively excluding ordinary people from buying sharia-compliant bonds directly.

Now though, Abu Dhabi Islamic Bank (ADIB) has launched an investment platform, Smart Sukuk, on which retail investors can buy so-called fractional sukuk for as little as $1,000.

This is direct ownership of the sukuk, not a derivative, Amit Malhotra, ADIB’s group head of retail banking told AGBI via email.

Until now, the best alternatives for religiously minded Gulf retail investors have been to invest through platforms such as Sarwa and Wahed Invest or a sukuk exchange-traded fund (ETF).

Such products pool investors’ money to buy tranches of sukuk, which typically have a minimum investment size of $100,000 to $200,000.

“Smart Sukuk is a foundational step in building a broader ecosystem that makes ethical, fixed-income investing easier and more inclusive,” said Malhotra.

ADIB, the UAE’s sixth-largest bank by assets, claims to be the first bank to offer a platform of this kind, which is open to its customers providing they meet eligibility criteria as per UAE banking regulations.

“Our platform enables customers to buy and sell anytime within trading hours, with the buy and sell mechanisms managed by the platform,” said Malhotra.

Sukuk are sharia-compliant investment certificates whereby investors receive periodic profit payments – similar to interest – from asset-backed income such as rent or business revenue, and also receive the principal repaid at maturity. As such, sukuk are similar to bonds.

S&P Global Ratings forecasts sukuk issuance will total $190 billion to $200 billion in 2025. That compares with last year’s $193 billion and $198 billion in 2023.

ADIB’s platform charges fees that equate to about 0.3 percent annually of a customer’s sukuk portfolio. So, owning $1,000 of sukuk would incur a fee of $3, for example.

“We anticipate significant growth driven by strong demand from retail investors who are looking to invest in sharia-compliant fixed income,” added Malhotra.

“At the beginning, our focus is onboarding early adopters and ensuring trading volumes grow steadily, with the aim to scale it later on.”