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03 February 2025 4 min read
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Haider Saleem
You want halal fixed-income investment options, but there aren’t many out there. Luckily for you, we’ve done the hard work and complied a Halal Fixed Income Investment Guide and Halal Investment Comparison to ensure your portfolio has some of these vital elements.
This review is of one of these promising options – Qardus.
In this article, we’ll discuss:
It’s an ethical, Islamic, equity crowdfunding platform, where you can invest in an unlisted company (a company that is not listed on a stock market) in exchange for shares in that company. We have a detailed article on crowdfunding here.
Qardus say they are the first ethical sharia-compliant business financing platform in the UK. Let’s break this down.
So you can use this platform to either invest in a business or secure funding. We’ll focus on the investment side.
The investment is structured via a Commodity Murabaha structure and is approved by most leading scholars.
Muslim business needs sharia-compliant working capital financing to cover their short-term operational needs. The Commodity Murabaha Agreement has a fixed profit rate and corresponding deferred sales price instalments are specified in advance. This allows them to finance their growth at a lower cost of capital compared to other methods. Qardus gives a fuller explanation here.
Even though this is not the most preferred sharia mode for financing, Qardus have stated that they plan to see if other structures can be offered and we are comfortable with their approach as it stands.
As Qardus explain on their website, a Qardus Special Purpose Vehicle (SPV) uses the funding provided by the investors to acquire commodities (usually non-precious metals such as tin or steel available from the London Metal Exchange) from the open market that it sells to an SME at cost price plus a profit margin.
The SPV, as the agent, then sells the commodities back to the open market on immediate payment terms and consequently, the SME receives an amount of cash equivalent to the cost price of the commodities but has an obligation to pay to the SPV the cost of the commodities plus the agreed profit margin over the term of the facility.
SPV shares will not generally have voting rights attached to them – details of the rights attaching to the SPV shares will be set out in the Musharaka Agreement and/or on the Qardus website when they communicate the investment opportunity to you.
You cannot sell your investment in a secondary market. So be prepared to stick with it for the long run. However, there are ways to sell your shares to a buyer as per Qardus’ terms.
Fees are charged to the SME, not the investor.
Qardus offer five different flavours of business financing.
Let’s take a look at what they’ve had to offer. You can take a look here for yourself.
As Qardus is a sharia-compliant platform, so are the businesses.
Unfortunately, when I signed up, I was presented with nothing. They had five offers which were all closed.
However, the closed offers do give us a flavour of what we can expect. The business ranged from a housing provider, a dental practice and pharmacies. Projected returns ranged from 10-15%, with a minimum investment of £100. The term for each offer was for 24 months.
The definition of what constitutes a high-return investment is subjective. Generally, anything 10% or above is a high return relative to other investments out there. Therefore, this platform is great to diversify your portfolio with a higher-return higher-risk investment.
Signing up is very quick and easy and you can start investing within a matter of minutes. You have to be at least 18, a permanent UK resident and have a UK bank account. You can also invest through your business if it’s registered with Companies House. However, as with any other investment platform, there are further checks required. My ID check came back in seconds.
Once you’re signed up, you’re presented with a small business that you can help finance. After investing, you receive your principal and returns in monthly instalments from the businesses you have funded over the term of the facility. They have a handy dashboard where you can track repayments.
It’s important you understand what these type of investment entails. It’s very easy to get carried away with high projected returns.
You can find and compare these types of investments on our halal investment platform.
High-risk investments have the potential to lose a large chunk of your principal investment (or all).
We have a full explanation of high-risk high reward investments here. However, some initial key points to consider:
We should all look at high-risk, high-reward investments as part of our portfolios. They do have a slightly higher buy-in than most, but those who qualify should seriously consider them and look to build a diversified basket of these types of assets alongside more mainstream and less volatile investments.
Qardus is a solid way to invest in these types of assets, in a sharia-complaint way, which have been thoroughly checked through. They offer high returns but are high-risk investments. If you are interested in signing up, kindly use this link here – it supports our work.
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03 February 2025 4 min read
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