25/01/2010 00:00 AST
Asian Finance Bank, the Malaysian unit of Qatar’s biggest Islamic bank, plans to start funds worth at least $150 million to invest in Asia to benefit from economic expansion in the region.
The bank, 70 percent owned by Qatar Islamic Bank SAQ, will start a $100 million fund to invest in environmentally-friendly projects, another 100 million ringgit ($29 million) for a retail project in Kuala Lumpur and an aviation fund to invest in aircraft purchases, Chief Executive Officer Mohamed Azahari Kamil said in a telephone interview in Kuala Lumpur today.
“Asia is going to drive the global economy,” Azahari said. “Middle Eastern investors are coming to Asia because there’s a lot of potential for growth here and they have not been exposed to the Asian market.”
Qatar Islamic and rivals including Kuwait Finance House KSC, the world’s second-largest Islamic bank, are boosting investment in Asia, a region the World Bank estimates will expand faster than the rest of the world. Islamic lenders offer banking services that comply with Shariah principles, including the religion’s ban on interest payments.
Abu Dhabi Investment Authority, one of the world’s largest sovereign wealth funds, raised investments in emerging markets where it sees greater growth opportunities, the fund’s managing director said in an interview with German newspaper Handelsblatt earlier this month.
Looking for Partner
Asian Finance began selling Shariah-compliant funds last year to add “value” to its main business of providing Islamic loans and other types of financing as they offer better yields, Azahari said. These funds will help the bank generate about 30 percent of its income from assets under management, he said.
Asian Finance is currently looking for the right partner for its aviation fund, which the bank aims to start by the end of the year, said Azahari. In addition to its Asian funds, the company has also teamed up with U.S. hedge fund Stella Capital LLC to establish a $100 million fund to invest in distressed property assets in San Francisco, he said.
In 2008, the bank set up a $300 million marine fund to invest in vessels and vessel contracts. The Safeena Fund made its first investment last month by providing $10 million to a chemical tanker project in Indonesia, Azahari said.
Asian Finance isn’t the only bank setting up Islamic shipping funds. Last month, Kuwait Finance, the country’s biggest Islamic bank, established the $150 million Global Shariah Shipping Fund with partners from Malaysia and Cyprus.
Malaysia, which accounted for more than half the world’s sales of Islamic bonds last year, is giving tax breaks and other incentives to banks to develop Shariah-compliant products in the country as it seeks to become an Islamic finance hub in Asia.
Asian Finance began operations in Malaysia in January 2007. It also has a representative office in Jakarta and is considering opening a branch in South Korea. Its other shareholders are Saudi Arabia’s RUSD Investment Bank Inc. with a 20 percent stake and Financial Assets Bahrain W.L.L, which owns 10 percent.
Bloomberg
Please wait...
