Wan Ariff gets loan for logistics takeover

By Habhajan Singh

Corporate figure Datuk Wan Ariff Wan Hamzah is all set to take control of Integrated Logistics Bhd's (ILB) local operations after securing the necessary financing from a local bank. Wan Ariff's outfit in the RM170 million takeover has secured loans totalling some RM70 million and is now prepared to assume control of the logistic company after earlier forking out some RM30 million cash.

"He has also been able to get Lembaga Tabung Haji (TH) behind him. Their presence in the deal, at the moment, is more of enabling Wan Ariff to take the deal through," one sources familiar with the deal told The Malaysian Reserve.

It is not clear at this moment whether TH, the local pilgrimage fund, is also pumping in money into the venture spearheaded by Wan Ariff, formerly part owner of privatised oil and gas services provider, Bumi Armada Bhd, along with business partner, billionaire T Ananda Krishnan.

Wan Ariff sold his stake in Bumi Armada and acquired Syarikat Borcos Shipping Sdn Bhd, which he has since sold a 40% stake to Sarawak-based Dayang Enterprise Holdings Bhd for about RM132 million last December.

In mid-February, ILB told the exchange it had received an offer for the takeover of its local logistics business for RM170 million.

On March 12, ILB announced that it had agreed to dispose of its Malaysian operations to AWH Equity Holdings Sdn Bhd for RM170 million in cash. The deal will see AWH, controlled by Wan Ariff, taking over ILB's wholly-owned unit, Integrated Logistics Solutions Sdn Bhd (ILSSB), and its wholly-owned unit, Integrated Warehouse Sdn Bhd, and M I Logistics Sdn Bhd.

The RM170 million in consideration includes the transfer of some RM141 million in ILSSB debts to ILB. AWH is jointly owned by Wan Ariff (70%) and Sidqi Ahmad Said Ahmad (30%).

Since Wan Ariff came into the picture, it is understood that ILB's local logistics business had been operating on a business as usual basis.

"It has been some six months. The business has suffered a little, simply because they could not go into an expansion mode due to the deal in the pipeline," said another source familiar with the company.

On March 15, sources had told The Malaysian Reserve that ILB's margin in its Malaysian operations had been slipping over the years, while the margins it was getting for its operations in China had been getting better.

(The Malaysian Reserve, 30 September 2010)

Maybank to boost Islamic finance ops in Indonesia

Top lender Malayan Banking Bhd (Maybank) has obtained Indonesian authorities' approval to convert its unit PT Bank Maybank Indocorp into a full-fledged Islamic bank, its chief said.

The move allows Maybank to step up its Islamic banking activities in the world's most populous Muslim nation. It also fits in with the group's plan of becoming the largest Islamic bank in Asean by 2015, president and chief executive officer Datuk Seri Abdul Wahid Omar said, reports Business Times (30 Sept 2010).

THE REPORT GOES ON:

The group's wholly-owned Islamic unit, Maybank Islamic Bhd (MIB), is already the largest Islamic bank in Southeast Asia with total assets of RM44 billion. It is ranked among the top 20 Islamic banks globally.

"Within the context of Asean, our market share in the Indonesian Islamic banking market is still small. We just started ... we just got the approval yesterday," Abdul Wahid told reporters after Maybank's annual general meeting yesterday.

He said Bank Maybank Indocorp, once converted, would be known as Maybank Syariah Indonesia (MSI).

"We are now in the midst of executing the plan for MSI and the next stage will be to consolidate that with the syariah operations under Bank Internasional Indonesia (BII).

"With that, we hope to be able to increase our (Islamic) asset base in Indonesia and to command a big market share. We are starting from a relatively small base with about US$200 million (RM616 million) of assets in MSI," he said.

BII is an Indonesian bank that Maybank acquired in 2008. There are currently 294 BII branches and Maybank aims to raise this to about 450 by 2012.

The group also hopes that more activities will come out of its joint venture investment bank in Saudi Arabia, known as Anfal Capital, in which it owns 18 per cent. "It could serve as a conduit for business and deal flows between the Middle East and Malaysia," Abdul Wahid said.

In Malaysia, Maybank is implementing a new strategy this financial year that will see it offering customers Islamic banking products over conventional ones as the first choice.

It aims to expand its Islamic financing base so that it accounts for a third of the group's total domestic financing portfolio by 2015 from 24 per cent currently, according to its annual report.

On Basel III global banking rules, Abdul Wahid said the Maybank group should have no problems complying.

30 vie for BNM Islamic finance award

Thirty nominees from around the world are being considered for The Royal Award for Islamic Finance.

The Securities Commission (SC) and Bank Negara said in a joint statement that the nominations were being deliberated by an independent international jury chaired by Tun Musa Hitam, chairman of the World Islamic Economic Forum Foundation.

“Unlike commercial awards which are deal-based, this award focuses on an individual’s record of achievement and outstanding contribution towards the advancement of Islamic finance globally,” they said.

“These 30 nominees represent the diversity and global acceptance of Islamic finance – from across all regions of the world including the Middle East, Europe, South-East Asia, Africa and Australia.

“This pool of influential drivers of global Islamic finance also includes non-Muslims and both genders.”

The Royal Award is spearheaded by the Malaysia International Islamic Financial Centre and supported by Bank Negara and the SC.

(The Star, 21 Septemebr 2010)

Al Baraka to spend RM618m on Indonesian, M’sian assets

By Anuja Ravendran
Bahrain-based Islamic lender, Al Baraka Banking Group, plans to spend US$200 million (RM618 million) on acquisitions and is looking at buying assets in Indonesia and Malaysia, Bloomberg reported yesterday, citing its chief executive officer, Adnan Ahmad Yousef.

Al Baraka also plans to sell US$200 million of sukuk by year-end and has appointed Standard Chartered plc as its manager for the sale, according to Bloomberg.

Al Baraka had even earlier on set its sights on Malaysia. In January, a Middle East news portal quoted Adnan as saying that the bank was talking to a Malaysian party to acquire a stake in Bank Muamalat Malaysia Bhd, which is 70% owned by DRB Hicom Bhd and 30% owned by government investment arm, Khazanah Nasional Bhd.
Al Baraka was said to be interested in buying a 40%-49% stake in the Malaysian lender as it sought new growth areas to diversify earnings amidst a maturing domestic market. Adnan had hoped to conclude the acquisition by end-2010.

However, a local newspaper had in mid-September reported that the talks had broken down as the parties could not agree on the terms.
DRB-Hicom had indicated that it was looking for a potential foreign strategic partner that will be able to bring its market to the Malaysian bank.
The Al Baraka Banking Group is is a Bahrain Joint Stock Company listed on Bahrain and NASDAQ Dubai stock exchanges, with Standard and Poors' longterm and short-term credit ratings of BBB- and A3 respectively.
The group, this year, acquired Pakistan's Emirates Global Islamic Bank Ltd, which boosted its network in the country to about 90 branches. It also began operations in Syria this year. The authorised capital for the bank is US$1.5 billion (RM4.64 billion), while total equity amounts to about US$1.7 billion.

(This story appeared in The Malaysian Reserve on 23 September 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)

Islamic finance seems overwhelmed by scholar reforms

Islamic finance is toughening supervision of its powerful religious advisers as shareholders worldwide demand increasing accountability from directors, but key reforms may do little to boost independence and transparency. Islamic banking is overhauling rules that govern the conduct of its influential sharia advisers, with competition for investor dollars and a growing market putting pressure on the once-arcane industry to adopt clearer, more uniform guidelines, according to Reuters (Sep 28 2010).

Key to these challenges is the small number of scholars advising a growing number of banks on increasingly complex financing structures, raising issues such as transparency of rulings, independence of advisers and how to groom new scholars. But varying sharia standards, different regulatory approaches and vast disparities in development across markets stand in the way of reforms to streamline and boost supervision, which are critical to growth, the article said.

It quoted John Sandwick, a Geneva-based Islamic asset and wealth manager, as saying: "Investors want to see the same degree of responsibility and professionalism going into sharia compliance as they expect from Moody's for credit ratings and S&P for market information."

The International Sharia Research Academy for Islamic Finance, which is backed by Malaysia's central bank, is planning a global regulatory body for sharia advisers. "This is a step too soon," said Ayman H. A. Khaleq, a partner and Islamic banking lawyer at Vinson & Elkins in Dubai, referring to the proposed global authority.

"I don't know how you're going to convince all governments that this is the best approach. Without convincing governments, how are you going to give teeth to that association?

Reflecting the industry's diversity, Middle Eastern countries like the United Arab Emirates leave regulation to the industry whereas Malaysian authorities assume centralized control through national sharia advisers and dedicated Islamic banking laws. Practitioners agree on the need for more supervision but differ on the scope of oversight needed, the article noted.

MAA Takaful inks collaborative agreement with LIMRA, CERT

By John Gilbert
MAA Takaful Bhd inked a collaborat ive agreement with Life Insurance and Market Research Association International (LIMRA) and Centre for Research and Training (CERT) yesterday as part of its strategies to further enhance its agency force and to reach a broader takaful market segment.
This is the first time LIMRA is undertaking a broadbased professional distribution development project with a takaful operator. Under the collaborative agreement, LIMRA and CERT will develop and implement a comprehensive Shariah-compliant leadership development programme encompas sing agency leadership training, certification and international recognition in addition to strengthening MAA Takaful's distribution network.
"We have about 6,000 active agents and we hope that within the next five years, half of the current active agents can be accredited as LIMRA Certified Managers of Financial Advisors," MAA Takaful chief executive officer, Salim Majid Zain, told reporters yesterday after the signing ceremony in Kuala Lumpur.

He said the programme will contribute towards value proposition and will further develop the takaful industry in the country.
"Our priority is to ensure that our takaful participants in every corner of the country receive professional advice through a well-suited system that focuses on their needs.
"We are confident this programme will deliver high and professional standard for takaful practitioners in the country," he said.

On MAA Takaful's revenue, Salim said the company is expecting RM1 billion in total revenue in five years through the strong presence of its distribution channels.
He said the contributions will come from life and general insurance segments, which stand at 60% and 40% respectively.
"We expect to receive RM750 million from life insurance in five years time and with the strengthening of our agency force, this will also contribute to our future growth," he said.
Up to June this year, MAA Takaful had already earned RM160 million in revenue and is expected to earn RM250 million by year-end.

(This story appeared in The Malaysian Reserve on 21 September 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)

Shariah scholars & Malaysia's SC

The amended Capital Markets and Services Act 2007 (Act) institutionalises in law the pivotal role of the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) as the authority for all Shariah matters relating to the Islamic capital market (ICM).

The amendments to the Act, which came into effect on 1 April 2010, give the SAC statutory recognition and mandate, empowering it in its role to ensure Shariah compliance on matters pertaining to ICM business or transactions, according to an article in Bank Negara Malaysia's electronic newsletter.

The article, entitled 'Amendments to Capital Markets and Services Act 2007 Institutionalises Role of Shariah Advisory Council in Malaysian Islamic Capital Market', reads:

The Act, as amended by the Capital Markets and Services (Amendment) Act 2010, contains comprehensive provisions relating to the role of the SAC and the Shariah governance process for the ICM. The amendments further give the SAC the mechanism to ensure legal certainty and comfort regarding Shariah rulings in the Malaysian ICM.

The SC's Chairman, Zarinah Anwar, is confident that the amendments will strengthen the SC's SAC as the law recognises it as the authority for the ascertainment of Shariah principles for ICM business or transactions. The SAC since its establishment has not only been an enabler but also a catalyst for innovation in the ICM on both the domestic and international front

The Act, amongst others, details out the functions of the SAC including "...to ascertain the application of Shariah principles on any matter pertaining to ICM business or transaction and to issue a ruling upon reference made to it; to advise the Commission on any Shariah issue relating to ICM business or transaction; to provide advice to any person on any Shariah issue relating to ICM business or transaction...".

In accordance with provisions of the Act, members of the SAC are duly appointed by His Majesty the Yang di-Pertuan Agong of Malaysia, and are qualified in the field of Fiqh al-Muamalat (Islamic law relating to financial transactions); Islamic jurisprudence; Islamic finance and other relevant disciplines.

The new provisions also enable any licenced person, stock exchange, future exchange, clearing house, central depository, listed corporation or any other persons to refer matters to the SAC for its advice and ruling which shall be binding on the person or entity concerned.

Another important provision of the Act relates to any proceedings before any court or arbitrator concerning a Shariah matter in relation to ICM business or transaction. In such a case, the court or the arbitrator is obliged to take into consideration any ruling of the SAC or refer such matter to the SAC for its ruling.

Where a ruling given by a SC-registered Shariah adviser to a person engaging in any ICM business or transaction is different from the ruling given by the SAC, the ruling of the SAC shall prevail.