Islamic funds best performer
A Standard & Poor’s report revealed fixed income Islamic funds were the highest performers in a loss-making sector during 2005.
Malaysian registered retail mutual funds produced an overall average loss of 4.15% in 2005, but the fixed income Islamic sector was the clear best performer with an average return of 5.44%. The average overall return for fixed income funds was 4.5%.
Bank Islam platinum card
Bank Islam Malaysia announced that it was aiming for a high market penetration for its credit cards in 2006. The bank understood it would be the first local Islamic bank to issue a platinum credit card, with a launch planned early in February. The target was 220,000 credit card holders by June 2006.
New trade finance products
Islamic and conventional Multi-Currency Trade Finance (MCTF) and Indirect Exporter Financing Schemes (IEFS) were
made available from 16 banks to small and medium enterprises (SMEs).
A Bank Negara Malaysia statement outlined how the MCTF provided financing to Malaysian direct exporters in pre and post-shipment financing. The IEFS provided ringgit financing to indirect exporters where the banks will discount their trade invoices arising from the supply of goods and services to direct exporters.
Avenue in stake sale
Avenue Capital Resources completed a share sale agreement for the sale of a 60% stake in Avenue Asset Management Services to Bank Muamalat. This strategic partnership resulted in the Avenue group being the first in Malaysia with two asset management companies – one specializing in Islamic products and one in conventional products.
AMMB Islamic banking unit
AMMB Holdings planned to open a dedicated Islamic banking division in April. AMMB customers could use AmBank Islamic banking through existing, conventional banking branches. Boost for Sprint
Sistem Penyuraian Trafik KL Barat (Sprint) looked set to gain a US$53.06 million (RM200 million) boost from its shareholders, with the initial US$26.53 million (RM100 million) invested when restructured Islamic bonds were issued. Maybank offer too low for MNI
MNI Holdings was advised to reject Maybank’s takeover offer of US$1.07 (RM4.02) per MNI share. Independent directors advised shareholders that the offer was not attractive on a price-to-book valuation. The MNI board believed that Maybank’s offer price failed to reflect the premium for a composite insurance license. Bank Negara tests securities bid system
Bank Negara Malaysia tested the bid system for the issue of Islamic debt securities based on the Ijarah leasing arrangement in early January.
It was suggested that the Ijarah bonds sale by the Central Bank may become a monthly issuance, with the first issue believed to be coming at the end of the month. It was also suggested that the one or two year bonds would be valued at between US$26.62 million (RM100 million) and US$53.24 million (RM200 million).
CIMB restructure
CIMB and Bumiputra-Commerce Holdings (BCH) completed a restructuring program involving a new CIMB Group management line-up.
CIMB Group bought all the assets and liabilities of CIMB, including Commerce International Merchant Bankers and 99.998% of BCH through a share issuance, resulting in BCH being a 72% owner of CIMB Group, with CIMB holding the other 28%. BCH then bought CIMB Group from CIMB for US$1.46 billion (RM5.5 billion). MAS funding
Malaysia’s state airline Malaysian Airline System (MAS) considered taking out a bank loan or selling bonds in order to raise half of the US$799.52 million (RM3 billion) needed to turn around its finances. The remaining US$399.76 million (RM1.5 billion) would come from selling MAS’s assets. The loss-making carrier may have been contemplating raising the required funds through Islamic financing and was in discussion with one of the industry’s leading Islamic bond banks – CIMB.
Affin aims to be investment bank
Affin Holdings applied for a license to operate an investment bank through merging Affin Merchant Bank, Malaysia’s first merchant bank, and stockbroking arm Affin Securities.
AmInvestment, ARA tie up
AmInvestment Group and ARA Private Equity entered into a memorandum of understanding to form a joint venture company to manage real estate investment trusts (REITs) listed on Bursa Malaysia.
AmInvestment Group would hold a 70% stake and ARA a 30% stake in the joint venture company. ARA, which has expertise in private equity real estate funds, Islamic compliant funds management and real estate securitization, would handle the business transfer and technical expertise in the management of REITs.
JCorp Wakaf fund
Johor’s investment arm, Johor Corp (JCorp), approved a corporate Wakaf fund, involving US$53.06 million (RM200 million) worth of shares being set aside for a corporate endowment. This was the first fund of its kind to be introduced in the country. Initially the fund would comprise shares of JCorp’s three listed companies.
Central Bank bond sales
Malaysia capped domestic bond sales for 2005 at US$8.36 million (RM31.5 billion), with a final US$266 million (RM1 billion) sale of three-year bonds on the 30th December. This figure was 20% lower than its earlier projection of US$10.51 billion (RM39.5 billion) from bond sales in 2005. In 2004 US$12.18 billion (RM45.9 billion) of bonds were sold.
Bank Negara Malaysia would hold 16 bond sales in 2006. There would be one sale of 20-year debt and five sales each of three-year, five-year, and 10-year bonds.
CapitaLand Islamic services unit
South-East Asia’s biggest developer, CapitaLand, established CapitaLand Amanah, a Shariah compliant unit to develop new real estate services in Asia.
CapitaLand Amanah would offer advisory services for investments targeted at institutional investors and high net worth individuals, and aimed to bring US$500 million of Islamic investments to investors within two years.
Southern Bank abandons Asia General
Southern Bank announced that it was no longer pursuing plans to acquire Singapore insurer Asia General Holdings.
BIMB Holdings to buy Securities
BIMB Holdings hoped to make BIMB Securities a wholly owned subsidiary. It bought a 49% interest from Permodalan Nasional for US$14.44 million (RM54.45 million) through a share issuance, and proposed to acquire the remaining 51% interest from BIMB Securities.
RH Capital sells Islamic debt
US$35.98 million (RM135 million) of Islamic debt was to be sold by RH Capital: US$22.65 million (RM85 million) of bonds with maturities ranging from four to nine years; and US$13.32 million (RM50 million) of three-year medium-term notes.
OCBC Bank (Malaysia) arranged the sale for RH Capital. The bond issue was structured as an Islamic lease agreement. Rating Agency Malaysia (RAM) assigned the bonds ratings ranging from AAA to A3.
Halal market expansion
A joint venture between Thailand and Malaysia hoped to attract in excess of 10,000 companies to the halal food industry within five years. Thailand would set up a US$26.53 million (RM100 million) fund – available in July – to expand the market for halal food products produced in the two countries.
TAKAFUL briefs
MAA sure of Takaful license
MAA Holdings expressed its confidence that it would be the recipient of one of the three new Takaful licenses to be bestowed by Bank Negara Malaysia before the end of February, due to its position as the largest local life insurance company.
Takaful firm owned by Maybank
Malaysia National Insurance (MNI) and Takaful Nasional officially became part of the Maybank group. Mayban Fortis Holding finalized the purchase of 74.2% of MNI and planned to make an offer to MNI Holdings’ minority shareholders to buy the remaining 25.7% shares in the insurance company early in 2006.
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