TOKYO -- Leasing giant Orix has become the first Japanese company to handle a Modaraba, a type of financial product compliant with Islamic law, through a business acquisition in Pakistan.
The financial products are similar to investment trusts in that an asset management company invests funds entrusted by investors and pays out distributions from profits. These contracts are offered widely in Islamic countries. The Modaraba market in Pakistan is estimated to be worth several hundred million dollars.
The business expansion stems from an Orix group company's recent acquisitions of Standard Chartered Services of Pakistan, which manages Modarabas, as well as a Pakistani leasing company for a total of about 1 billion yen ($9.57 million). Orix hopes to use the know-how in handling Modarabas in Pakistan to offer such products in other Islamic countries, broadening its offerings in the sharply growing market for financial services compliant in Sharia, or Islamic law.
Orix established Pakistan's first leasing company in 1986. This company now handles leasing of automobiles, machinery and various types of equipment and facilities.