Islamic Economics

Summary

A video from IFG argues the Muslim world needs a halal, debt-free form of private equity to grow small Muslim-owned businesses into global companies, contrasting this with debt-driven buyouts it says weakened Toys R Us and ASDA.

What it argues

1. Case for Muslim private equityEconomics

   IFG says the Muslim world has many entrepreneurs and small businesses but few global Muslim-owned companies. IFG argues private equity is the tool used in the West to scale firms from millions to billions. IFG frames private equity as the missing tool to grow Muslim businesses into global firms.

2. Debt-driven buyouts criticisedEconomics

   IFG cites Toys R Us's 2005 $6.6bn buyout, about $5bn funded by debt, which ended in bankruptcy in 2017. IFG cites ASDA's 2021 £6.8bn debt-funded buyout by the Issa Brothers and TDR Capital, after which ASDA sold assets and lost market share. IFG says conventional private equity's reliance on debt can weaken the companies it buys.

3. Halal, equity-led modelEconomics

   IFG contrasts debt-funded buyouts with an equity-based approach it says builds value rather than extracts it. Its Curate fund has invested over £30m in more than 40 pharmacies across northern England without interest-bearing debt. IFG presents its pharmacy investment as a model for growth funded without debt.

4. Sharia compliance via ownershipLaw & rulings

   IFG argues equity-funded growth would let Muslim-owned businesses meet sharia debt-ratio rules naturally. It says this would remove the need for the compromises used in current halal stock-market screens. IFG argues scaling via equity could make sharia compliance structural rather than a screening compromise.

5. Muslim-owned global ambitionSociety

   IFG's presenter envisions Muslim entrepreneurs building firms comparable to Tesla or Amazon. He says such companies could give Muslims influence currently held by figures like Elon Musk or Mark Zuckerberg. IFG frames scaling Muslim businesses as a route to global economic and cultural influence.

Open questions

• Whether an equity-only, debt-free private equity model can scale across the wider Muslim world as IFG proposes.
• What returns or outcomes IFG's pharmacy investment has produced beyond the figures it cites.