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UIB Overview

The only full service Islamic investment bank in Gulf CooperationCouncil (GCC) Bahrain, KSA, Kuwait, Oman, UAE & Qatar

Regulated by the central bank in Bahrain - Bahrain Monetary Agency

(BMA)

Paid Up Capital: USD120 million

UIB recognizes the needs of under-served markets with pent-updemand for Islamic products

Increasing global awareness of Islamic financing

A solid business model with competitive products and services whichattract investors even from conventional markets

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F ive Business Lines

Unicorn offers diversified products across an integrated range of financial products and services

Corporate

Finance andCapitalMarkets

PrivateEquity

Mergers and

Acquisitions

Takaful(Insurance)

Asset

Management

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Offices

Unicorns Global Reach

USA (Chicago)

GCC- Bahrain (Corporate), Dubai and Kuwait (Planned: KSA)

Asia-Pacific Malaysia (Kuala Lumpur)

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W hy Islamic F inance?

j Approximately 20% of the worlds population is Muslim

Unicorn aims to focus itsoperations across a majority of these countries

78 million US, UK, Germany, France & Turkey

96 million GCC, Egypt & Jordan

215 million Malaysia, Singapore & Indonesia

414 million Bangladesh, Pakistan & India

6 2 million Algeria & Morocco

MuslimPopulation

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Global Demand for Islamic Financial Products growing @ 17%annually

Oil revenues to produce current account surplus of $ 4 00 Billion in2006 in ME & GCC

Demand likely to be fueled to levels not seen before due toincreasing oil revenues

ME & GCC economies to grow at 5.5% in 2006

More than 300 Islamic Financial Institutions operating globally

Islamic F inancial Markets

General Observations

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Key Objective

Become a major player in developing the Islamic capitalmarkets through the growth of primary housing finance

markets and filling the gap for fixed-income investmentinstruments via Sukuk (bond) issuances

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Model

Own and operate housing finance companies with strategic partners in Islamicmarkets offering world class mortgage origination, underwriting and servicingtechnology

Islamic housing finance products and operations

Utilize warehouse lines and bond issuances (Sukuks) as main source of funding

Securitize and issue Sukuks (MBS) on a flow basis

Develop GCC and other emerging Islamic capital marketsCorrespondent program to enforce origination, underwriting and servicing

standards

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Islamic Housing F inance - GCC and Beyond(Turkey, Jordan, Lebanon)

Attractive demographics and population size

Key reforms at the sovereign level relating to housing finance andcapital markets

Stable political and legal/regulatory environments

Growing middle class and consumer markets

Decent sovereign ratings

Mortgage to GDP Ratios much below the more developed mortgage markets

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Uniquely Positioned to Build and Capture Islamic Primary/Secondary Housing F inance Markets

A strategic alliance with UIB provides the following advantages :

Renowned capabilities in developing Islamic structures/products

Strong expertise in housing finance relating to the primary, as well as the secondarymarket

Qualified staff with extensive Western experience

Clear vision & strategy to become the major player in the Islamic housing financemarkets

Willingness to form strategic alliances to gain from international and local expertise of respective partners

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Demystifying Islamic Primary Mortgage Market Principles

Making money from money is not Islamically acceptable Thus, Islam prohibits interestand usury (Riba )

Key Islamic mortgage principle the financier must share in the risks and rewards relating to an underlying asset rather than receiving a fixed and guaranteed interestincome

2 common Islamic mortgage structures:

Ijara (akin to a finance lease ) a financer purchases an asset and leases it to a client through aleasing contract for a specified rent and term. The owner of the asset (the financier) bears all risksand rewards associated with ownership and sells it to the client upon payment of the last installment

Mush araka (akin to a declining-balance mortgage ) an equity participation contract under which afinancier and its client contribute jointly to purchase a home (e.g. financier ( 80%) and client (20%).Ownership is distributed according to each party's share in the financing (co-ownership). The titledeed is held in the name of the financier and transferred to the clients name upon payment of the lastinstallment

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Demystifying Islamic Secondary Mortgage Market Principles

Islamic bond (certificate) is known as a Sukuk

Key mortgage-backed Sukuk principle : the certificate must be asset and not just debtbased

Must sell the underlying asset (i.e. real estate property) into the secondary market andnot just the receivables(i.e. transfer of risks and rewards in the real estate asset)

Tradable mortgage-backed Sukuks are backed by i jara and m ush araka structures

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Housing F inance and Bond Markets

Housing Finance and bonds (MBS) are the backbone of any economy and capitalmarkets, respectively

USD7 trillion of mortgages (residential/commercial) originated in the U.S.annually; whereas the U.S. corporate market stands at USD 4 trillion annually

Approximately 40 industries linked to housing finance (e.g. insurance, appraisaland construction)

Housing finance key to development of SME market

MBS a key tool for the development of the bond markets (e.g. In 1 970, first U.S.MBS issuance; by 1 99 5 USD20 trillion of MBS)

MBS allows for lower interest rates due to increased competition and long-termtenors

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Source of F unding - Debt Capital Markets

Trends in conventional Capital (Bond) Markets will berepeated in the Islamic (underdeveloped) financialmarkets.

Conventional

198 0s and 1 99 0s 2000 2006

Islamic

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Total MBS issuance

$54 .2 $5 7 . 1$ 60.4 $777.

$54 .

$ 1 3 62. 1

$ 1 83 7.

$4 88 .3 $5 13 .2

199 4 199 5 199 6 199 7 1998 1999 2000 200 1 2002

2002 MBS market sh areUS$ billions

Total MBS issuance $1, 838

Total originations $2,526

Total MBS outstanding $3 ,157

Annual MBS issuance

Source: Inside MBS and ABS, January 10, 200 3

Evolution of U.S. Mortgage Securitization - Market Sizing

73%of mortgageoriginations

fundedthrough MBS

U.S. Securitized Assets

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Case Study: Kingdom of Saudi Arabia (KSA)

Largest GCC market

Total GDP : USD 400 billion

Mortgage to GDP Ratio : 1.9%

Demand for 300,000 housing units annually

Housing finance potential : USD 45 billion annually(Est: 1/ 4 of the housing units are built and financed)

Total Population : 22 million

Growing middle class (Annual Income Level: USD1600 USD 3200)

Baby Boomers - 65% of the Population under age 35

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GCC Demographics

erce age o op a io