BIMB to swap listing status with Bank Islam

By Habhajan Singh

The listed status of BIMB Holdings Bhd, the entity controlling an Islamic bank and a takaful operator, may be "transferred" to its 51%-owned subsidiary Bank Islam Malaysia Bhd.

It is understood Lembaga Tabung Haji, which has a 51.47% stake in BIMB and another 9% direct stake in Bank Islam, is mulling at stripping the listing at the holding company level and passing it on to Bank Islam, which contributed a huge chunk to BIMB's revenue and operating profit.

"The matter has been raised at Tabung Haji's investment panel. The thinking is to collapse the listing direct to the Bank Islam level in recognition of its role as the main group revenue driver," one source told The Malaysian Reserve.

At the moment, BIMB holds a 65.22% stake in Syarikat Takaful Malaysia Bhd, which is also listed on Bursa Malaysia.

"The decision, if any, will come from the investment panel. It's a powerhouse when it comes to deciding Tabung Haji's investments," said another source familiar with the operations of the pilgrim fund.

The Tabung Haji investment panel, chaired by Eastern & Oriental Bhd chairman Datuk Azizan Abdul Rahman, include Malayan Banking Bhd president and CEO Datuk Seri Abdul Wahid Omar, legal firm Kadir Andri & Partners' Abdul Kadir Md Kassim and Shell Malaysia Trading Sdn Bhd former managing director Datuk Mohzani Abdul Wahab.

When contacted, BIMB said it was "not aware" on any transferring of the listing status by Tabung Haji. At press time, Tabung Haji had yet to response to queries from The Malaysian Reserve.

[FULL STORY IN THE MALAYSIAN RESERVE, 16 AUG 2010, or at epaper.themalaysianreserve.com]

Crescent Investments on Islamic banking in Oz

By Habhajan Singh

The lack of regulations supportive is one of the challenges when one tries to structure Islamic finance proeducts in Australia, but the sitaution is slowly changing. This was one of the challenges identified by Crescent Investments Australasia Pty Limited, an investment firm providing Shariah compliant investment products.

"We face many challenges in Australia, in trying to structure Shariah compliant products. The laws and regulations were not designed for Shariah compliant products and we have spent significant time, effort (not to mention expense) negotiating our way in the legal system to ensure compliance with the Australia statute and common law as well as Shariah rulings," said its executive chairman Talal Yassine. However, he noted that the Australian authorities are now paying serious attention to the Shariah compliant market.

"We anticipate that the policy and regulatory frameworks in Australia will be looked at quite closely with a view to further facilitating Shariah compliant investments," he said in an email reply. Crescent Investments has worked hand-in-hand with Amanie Business Solutions, a Malaysian inspired Islamic finance consulting firm, in structuring products for the new, but growing, market for Islamic finance in Australia.

On March 19, The Malaysian Reserve reported that Amanie, led and anchored by prominent Shariah scholar Dr Mohd Daud Bakar, is looking to expand its presence in Australia and Europe to tap the growing business opportunities in those regions. The report said that Amanie was looking at opening up offices or partnerships in Australia, while the choice for Europe is between London and Luxembourg.

"There are concrete proposals to the [Australian] Government to amend some laws to accommodate Islamic finance. These are some of the areas of interest," Dr Daud Bakar had told The Malaysian Reserve.

He was referring to the Australia financial centre report presented to the Australian Parliament and made public in mid-January which had recommended on withholding tax on offshore borrowings and on Islamic finance, to improve its ‘access to offshore pools of savings at competitive rates, so as to provide more diversified and cheaper funding for Aust ra l ia’s inve stment needs’.

Commonly known as the Johnson Report, it was commissioned by the Government in September 2008 as part of its commitment to secure Australia’s future as a leading financial service centre.

Amanie has advised a number of deals originating from there, including LM Investment Management Ltd’s (LM) Islamic property fund and Crescent Investments’s equity fund, both being the first of their kind in that part of the world.

On Amanie's plans to step up its presence in Australia, Talal said there is much potential in Australia for the development of a Shariah compliant market for the local community and global investors.

"If you look at the Australian market, it is very robust, well run and safe. It also has significant positive exposure to the ever growing Chinese market and has even weathered the GCC with aplomb. Combine this with a world leading Shariah compliance advisory firm and this, in my view, creates a recipe for success," he said.

Asked to describe his outfit, Talal said Crescent Investments is a specialist investment firm focused on providing investors with a range of Australian focused wealth management products that are based on a new global investment phenomenon called Shariah compliant Investments to meet the needs of the Muslim and the broader Australian investment community.

"Crescent develops the products in consultation with our Shariah Supervisory board, who are scholars and experts in managing the products over a range of different risk profiles and domains.

"Crescent is lead by an experienced and robust team, made up of professionals from the Australian Muslim Community, which is committed to ensuring that all returns are absolutely Shariah compliant and that such investments are attractive, sustainable, diversified and consistent," he said.

(This story appeared in The Malaysian Reserve on 29 March 2010. 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)

Indonesian Pension Fund to start Islamic Unit

PT Jaminan Sosial Tenaga Kerja, Indonesia’s state pension fund, said a joint venture with the Islamic Corporation for the Development of the Private Sector is expected to start operations next year.
The initial paid up capital of the joint-venture will be about 1 trillion rupiah (US$106.2 million [RM357.63 million]), with Jamsostek, as the fund is known, taking majority ownership, Hotbonar Sinaga, its president director, told reporters in Jakarta, reports Bloombergs (Nov 16, 2009).
The report said the company has submitted the proposal to Indonesia’s finance and state enterprise ministers.
It qouted Sinaga as saying: "The new unit is expected to be in operation at the earliest in the first quarter of next year."
Companies like Jamsostek aim to pull more investments from the Middle East to overtake Malaysia as the Asia-Pacific region’s Islamic finance hub, it added.
The Islamic Corporation for the Development of the Private Sector is the investment unit of Saudi Arabia’s Islamic Development Bank.
"The joint venture unit is expected to boost our investments," Sinaga said, without elaborating.
The report added the Jakarta-based pension fund manager plans to shift around 4 trillion rupiah of its funds from bank deposit to bonds to capitalise on the high yield in the corporate and government bonds, Sinaga said.
Jamsostek manages about 75 trillion rupiah of funds as end of August and is seeking to increase the amount to 80 trillion rupiah by the end of this year, Sinaga elaborated. Shariah law bans the payment and receipt of interest, prohibits investment in businesses related to gambling and alcohol, and stresses profit sharing.

Bank Islam targets initial fund size of RM100m for Ziyad NID-i

By T Vignesh
Bank Islam Malaysia Bhd expects a full take up within a month for its newly launched Ziyad NID-i, an investment product structured with an initial fund size of RM100 million, to take advantage of the recovery of Asia's equity markets.
Bank Islam's consumer banking division general manager Khairul Kamarudin (picture) said that this is the bank's second Islamic structured investment product, the first being launched last year.
The minimum investment amount for Ziyad NID-i is RM65,000 and subsequent investments are in multiples of RM5,000.
At the same time, Bank Islam is expecting to launch a deposit based product before the end of its financial year ending June 30, 2010, catered for retail consumers and corporate customers.
Khairul said Bank Islam is awaiting regulatory approvals.
On Ziyad NID-i, he said that it is designed for investors who hold the view that Asia's equity market will recover in the medium-to-long-term. Ziyad IND-i is a five year investment product in the form of Islamic negotiable instruments (INI) with a 100% capital protection upon maturity.
"The product has been structured to offer attractive return structure yet with conservative features to protect clients' interest.
"However, as the Asian economies continue to recover, the stock markets are also expected to perform well, thus providing potential higher yields for the fund," Khairul told reporters at the launch of the Ziyad NID-i product in Kuala Lumpur yesterday.
He said that investors may potentially enjoy a much better return than traditional fixed deposit rates.
Nevertheless, should the Asian economy deteriorate, it is anticipated that Ziyad NID-i investors should receive a minimum profit of 7.35% over the whole investment period or approximately 1.47% per annum if held to maturity. Khairul said that the fund is linked to a basket of stocks deemed to benefit from a massive stimulus plans undertaken by various Asian governments.
The stocks in the basket are China Mobile Ltd (China), CNOOC Ltd (China), Panasonic Corp (Japan), Canon Inc (Japan), BHP Billiton Ltd (Australia) and KKDI Corp (Japan). He said the six stocks chosen are constituents of the Dow Jones Islamic market Titans 100 Index, which consists of the world's largest 100 companies involved in Shariah-compliant businesses.
Khairul said that they were selected based on trading and liquidity considerations as well as analyst recommendations while conforming to geographical and sectoral diversification purpose along the lines of the Asian recovery theme.
In addition, these stocks will be monitored closely throughout the investment period to ensure no infringement of Shariah rules and principles. According to Securities Commission data as at June 30, 2009, four Islamic based funds were launched this year.
They are Am-Recovery Income-Capital Protected, CIMB Islamic Greater China Equity launched by CIMBPrincipal Asset Management Bhd, HwangDBS Aiiman Sukuk fund and AmanahRaya Islamic cash management.

(This story appeared in The Malaysian Reserve on Nov 17, 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)

Ekuinas to avoid 'sin' stocks

Malaysian Government-linked private equity fund management company Ekuiti Nasional Bhd (Ekuinas) is not a Shariah fund, but it has refrained from investing in 'sin' sectors like gaming and alcohol, reports The Star (September 5, 2009).
The report quoted its CEO Abdul Rahman Ahmad as saying that industries like property and construction were ruled out because "there’s enough interest and companies in these sectors."
The targeted companies for investment should be existing medium-sized firms with high potential for growth. "We don’t need to specify the number of years and the level of revenue or profit that the company needs to generate, as long as we’re convinced that the company is sound and has demonstrated enough track record," Rahman told the newspaper.
The newly set up outfit expects to identify its initial investments in six months. The selection process would also consider the specific industry and its business cycle. "You can’t really have one-size-fits-all basis type of requirement," he said.
Ekuinas, which has an initial fund size of RM500mil that will eventually be enlarged up to RM10bil, expects to generate double-digit returns on investments, with average size of RM50mil over three to five years of investment horizon, the report added.

Corston-Smith plans RM1b Islamic fund

Malaysia’s Corston-Smith is planning a US$282.5 million Islamic fund as it sees growing demand for companies with good governance after high profile financial frauds hit investor confidence globally, said a top executive, reports Reuters (Sept 2, 2009).
The report quotes Shireen Muhiudeen, founder and managing director of Corston-Smith Asset Management as saying: "I think the financial crisis clearly has elevated the reason why governance is so important. There’s a great parallel between Islamic finance and corporate governance and transparency."
Syariah, a legal framework that regulates both public and private life, prohibits financial transactions from being purely speculative activity. The Islamic law also bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol, pork, arms, pornography or gambling.
THE REPORT GOES ON:
Corston-Smith’s new fund will target international pension groups as potential investors, said Shireen.
“We are speaking to quite a few large pension funds around the world and shortlisted by a few government groups internationally,” she said.
Corston-Smith’s existing portfolio of about RM90 million (US$25.41 million) comprises Southeast Asian companies mainly from the oil and gas, oil palm plantation, retail, resource-based and manufacturing sectors, she said.
Corston-Smith invests in these sectors because it believes they will be the direct beneficiary of Asia’s large population and growing economy.
“If you look at the Asean region, we got a very large population, and a very large population that’s under 30. As a young population, playing on the consumers is important,” said Shireen, who has been in the fund management industry for 22 years.
UK fund manager Hermes owns 30 per cent of Corston-Smith.

i-VCAP to launch four Islamic funds this year

i-VCAP Management Sdn Bhd, now a full-fledged Islamic fund management company, plans to launch three to four Shariah compliant funds this year. This is to add to its flagship fund, MyETF-DJIM25 (MyETF Dow Jones Islamic Market Malaysia Titans 25), Asia's first Shariah compliant Exchange Traded Fund.
i-VCAP has recently obtained approval from the Securities Commission to operate as an Islamic fund management company in line with its business objective.
The company had been operating under the licence for general fund management services even though the company has been undertaking exclusively Islamic fund management activities since its establishment in 2007.
i-VCAP CEO Zainal Izlan Zainal Abidin said in a statement on Mar 26the company's business objective to provide Islamic fund management services is driven by its aspiration to fulfil the demand within a segment of the fund management industry which the company believes is still under-served.
"It reflects the company's confidence in the potential size and growth of the Shariah compliant fund management segment, in which i-VCAP intends to play a significant role", he added.
At the same time, its focus on developing an Islamic fund management business is consistent with the Government's efforts to enhance Malaysia's position as a leading Islamic financial centre.
In this regard, the infrastructure and regulations supporting the Islamic financial and capital markets in Malaysia are relatively well developed, with work for further enhancement being done on an ongoing basis, thereby creating a conducive environment for i-VCAP to develop its business.
MyETF-DJIM25, listed on Bursa Malaysia on Jan 31, 2008, allows investors to gain simultaneous exposure to 25 leading Shariah compliant companies listed on the local bourse. The fund is currently the largest Shariah ETF in the world in terms of net asset value, which is about US$140 million (RM507.44 million).

(The Malaysian Reserve, Mar 27, 2009, P9)

US, Middle East investors keen on distressed assets

By Habhajan Singh
A Malaysian Shariah advisory body is advising a number of fund managers from the United States and the Middle East who are keen on managing distressed assets in a manner compliant with Shariah — another new innovation being injected into the fast growing field of Islamic finance.
These funds managers, believed to have an estimated average fund size of US$500 million (RM1.83 billion), are keen to pick up distressed assets, following the economic downturn, to form funds that will be used to tap Islamic investors.
"We've been approached to structure products to enable the fund managers to launch their funds. "They want to structure Islamic funds for distressed assets," said Amanie Business Solutions Sdn Bhd CEO Dr Mohd Daud Bakar.
Managing distressed assets via a mechanism in line with Shariah law is one of the latest developments in Islamic finance. In recent years, Islamic finance has caught the attention of global investors and has expanded into providing sophisticated financial products like private equity, project finance, origination and issuance of sukuk, as well as fund, asset and wealth management products.
"Due to the global crisis, we now have many distressed assets. Hence, this is a 'timely' product. Its not a product of all seasons," said Mohd Daud, who also chairs the Shariah Advisory Council of Bank Negara Malaysia (BNM).
These funds are new because of the time frame, and the Islamic finance fraternity has never had the chance to manage distressed funds, Mohd Daud said on the sidelines of the one-day seminar
"Potentials and opportunties in Islamic asset management post-2008 global financial crisis", organised by Amanie in Kuala Lumpur yesterday.
"The target market for the funds are Shariah-compliant investors. Hence, you have to ensure that the assets that go into the fund are Shariah compliant. We have to avoid hotels and some warehouses," he said.
"We have to screen the assets for them, put in the right structures and help advise cash management of the fund.
"The bottomline is, the money will go into assets that are perceived to be undervalued, in hopes that they will go up in value," Mohd Daud said.
He added that no local fund manager has approached them for the Islamic method to handle distressed assets.
"Once structured, I believe this product can be applied in Malaysia as well if investors are keen and well versed with properties," he said.
Fund managers are already on the prowl for such assets. On Feb 17, Reuters reported that US private equity manager Lone Star Funds, which forged deeper into distressed real estate as the credit crunch took hold in 2008, was raising another US$20 billion for troubled assets.
Half of the new cash will be earmarked for commercial real estate, including commercial mortgage-backed securities while the other portion will be invested in financial institutions and other distressed assets, including residential mortgages and corporate debt.
Yesterday, Amanie also launched its stock screening solutions targeted at the Islamic investment and financial community.

(This story appeared in The Malaysian Reserve on Feb 19, 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)

Pacific Mutual launches new Islamic fund

Pacific Mutual Fund Bhd, the fund management arm of PacificMas Bhd, today launched the Pacific Protected Islamic Cash Fund.
In a statement in Kuala Lumpur yesterday [Feb 5, 2009], it said the fund aimed to provide capital protection as well as constant, steady returns comparable to Shariah based deposits with licensed financial institutions.
"The investment is ideal for investors with a conservative risk profile and who are seeking regular and decent returns from a relatively safe investment which complies with Shariah requirements," it said.
Pacific Mutual's chief executive officer, Michael Auyeung, said corporate investors could benefit from the advantages of principal preservation, regular income and easy access to their cash whenever they needed them.
"Corporate investors can also benefit from the tax exemption on returns from investments in Islamic money market instrument via the fund," he said.
Auyeung said the fund aimed to generate regular income by investing predominantly in a highly conservative portfolio of shortterm Shariah based deposits and Islamic money market instruments issued by licensed financial institutions that carry a minimum credit rating of 'A2' by RAM Rating Services Bhd or an equivalent local or foreign rating agency.
The fund is open only to individuals with total net personal assets exceeding RM3 million, corporations exceeding RM10 million, unit trust schemes and pension funds. — Bernama
(This story appeared in The Malaysian Reserve on Feb 6, 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)

Malaysian regulator approves 3 new foreign Islamic fund managers

The Securities Commission (SC) has given its approval for three new foreign Islamic fund management companies (IFMCs) to start operations in Malaysia. The three are Aberdeen Islamic Asset Management Sdn Bhd, BNP Paribas Islamic Asset Management Sdn Bhd and Nomura Islamic Asset Management Sdn Bhd, the regulator said in a statement on Jan 29, 2009.
It said the three companies already have a presence in the conventional asset management industry in Malaysia, as part of the five licences issued under a special scheme announced in 2005 to broaden the international participation in the Malaysian capital market.
Their interest to further expand their fund management business indicates their confidence in the Malaysian fund management industry, and reaffirms the growing interest among international players to make Malaysia the global hub for Islamic fund and wealth management activities, it added.
"Despite the global slowdown, the coming on board of these three international players reflects the strong growth potential in niche areas like Islamic fund management," said SC chairman Datuk Sri Zarinah Anwar. "This will help add depth and breadth to the Islamic finance industry, of which Malaysia commands a leadership role."
In granting the approval, the statement said the SC had considered, among other things, the scope of operations that will be established by the three Islamic fund management companies (IFMCs) in Malaysia, their fund management experience, brand value, expertise in various markets, geographical presence, and compliance and risk management capabilities.
The statement also provided comments from representatives of the newly approved players.
Atsushi Yoshikawa, president & CEO of Tokyo-based Nomura Asset Management Co Ltd commented: "Nomura Asset plans to position Islamic fund management as one of our most important strategies. With the establishment of Nomura Islamic Asset Management, we plan to provide a wide range of products and services to Asia and the Middle East regions".
BNP Paribas Investment Partners is firmly committed to further developing its existing Islamic investment capabilities, said Vincent Camerlynck, global head of business development and member of the executive committee, BNP Paribas Investment Partners in Paris.
"The domestic Islamic finance sector has been growing rapidly," said Aberdeen Asset Management Sdn Bhd managind director Gerald Ambrose.
The others who have been approved to establish operations are Kuwait Finance House (Malaysia), DBS Asset Management, CIMB-Principal Asset Management, Global Investment House and Reliance Asset Management, the SC said.

SEE ALSO: SC gives nod to 2 foreign fund managers