Khazanah Nasional Bhd has invested US$150 million (RM525 million) for a 25% stake in a the newly-formed Islamic investment firm, Fajr Capital Ltd, which will also be jointly owned by the sovereign investment bodies of Abu Dhabi and Brunei and a Saudi-based private firm.
Khazanah said Fajr Capital has raised US$588 million after the first round of funding from its shareholders and will focus on providing Shariah-compliant financial services and complementary opportunities in major Muslim regions.
The investment firm, to be based in the Dubai Financial Centre with offices in Kuala Lumpur and London, will be an active and enabling investor in its portfolio of companies with the aim of helping to optimise performance through best-in-class products, service standards, technologies and Shariah expertise.
The move by Khazanah to participate in the Islamic investment firm signals a recent rise in the joint establishment of investment funds by Malaysia and countries in the Middle East.
Last week, the government announced it was setting up a US$2.5 billion fund with Saudi Arabia's PetroSaudi International Ltd while Minister of International Trade and Industry Datuk Mustapa Mohamed yesterday said efforts were underway by Khazanah and the Qatar Investment Authority to set up a US$1 billion joint investment fund.
For Fajr Capital, Khazanah's partners in the investment firm are the Abu Dhabi Investment Council, Brunei Investment Agency and Saudi-based The Mohammad & Abdullah Al Subeaei Investment Co (MASIC). Khazanah's managing director Tan Sri Azman Mokhtar said the venture into Fajr Capital would provide cross linkages between Malaysia and key Muslim markets and lay the foundation for a stronger economic cooperation.
"Islamic financial services is a key priority for Malaysia, and Khazanah's participation in Fajr Capital reflects our commitment to this area.
"This partnership also embodies Malaysia's deepening links with the Middle East and broader Muslim world — regions that are important sources of capital and attractive markets for us to invest in," he said in a statement yesterday.
Azman is a member of Fajr Capital's board of directors, which is chaired by Sheikh Ebrahim Khalifa Al-Khalifa, who is the chairman of the accounting and auditing organisation for Islamic Financial Institutions.
Khazanah said Iqbal Khan, formerly the founding chief executive of HSBC Amanah, has been appointed as CEO of the investment firm.
Other senior members in the company's management team include former BIMB Holdings Bhd CEO Datuk Noor Azman Aziz, while management team members include former executives at HSBC Amanah, Citigroup and ABN Amro.
"The global crisis has highlighted the need for an ethical and community-based approach to investment.
The Islamic financial services indust ry i s st rategical ly positioned to fulfill this need in our target markets.
"We see these markets as our home and wish to work with local partners and indigenous management to grow our portfolio companies and to increase the overall market share for Islamic financial services," Iqbal said in separate statement by Fajr Capital yesterday.
(This story appeared in The Malaysian Reserve on Oct 7, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)
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