Malaysia’s CIMB group plans 350 mn Ringgit Islamic Fund

Malaysia’s CIMB group plans 350 mn Ringgit Islamic Fund
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First Published: Wed, Jan 31 2007. 03 20 PM IST
Updated: Wed, Jan 31 2007. 03 20 PM IST
CIMB Group Sdn., Malaysia’s second- largest financial services provider, plans to raise 350 million ringgit ($100 million) for an Islamic equity-linked fund to tap growing demand for Shariah-compliant financial products. The five-year Islamic All-Stars Global Restricted Mudharabah Structured Investment-i fund will be linked to the performance of 20 companies including Nike Inc., Microsoft Corp., Hutchison Whampoa Ltd. and Samsung Electronics Co. Ltd., CIMB Group said in a statement. The fund will be offered to investors in Malaysian ringgit and Singapore dollars. “Islamic finance is a mega trend for our generation and for Malaysia,” and growing at 15 percent to 20 percent a year worldwide, Nazir Razak, chief executive officer of CIMB, told reporters in Kuala Lumpur today. “You can accelerate growth in demand if you have more products available in the market. That’s what we are doing now.” Malaysia wants to lure new investment and tap rising demand for Islamic financial products in a country where at least 60 percent of the population is Muslim. Companies and governments in the Middle East and Asia have introduced Islamic stock indexes and funds to attract an estimated $300 billion of assets held by Islamic mutual funds worldwide. Bursa Malaysia Bhd., the nation’s stock-exchange manager, on Jan. 22 introduced a new Islamic index with the FTSE Group. The FTSE Bursa Malaysia EMAS Shariah index gives investors a clearer picture of quality Shariah investments in the Malaysian market, Bursa Chief Executive Officer Yusli Mohamed Yusoff said. Minimum Investment CIMB plans to raise the funds over the next three weeks, Nazir said. The minimum investment in the Islamic fund, which will have an estimated return of 8 percent to 10 percent a year, is 250,000 ringgit or 10,000 Singapore dollars. By introducing new Shariah-compliant products and services, Bumiputra-Commerce Holdings Bhd., the listed holding company of CIMB, is seeking to increase the revenues generated from Islamic financial products, Nazir said. Islamic law, or Shariah, bans the payment of interest and prohibits investment in tobacco, alcohol and gambling businesses. “Contribution now is still too little because we are relatively new in the market,” he told reporters. “We hope contribution will be more than 20 percent of our total revenues” in the next three years. Bumiputra-Commerce said in November third-quarter profit jumped 66 percent after it bought Southern Bank Bhd. to expand its consumer lending business. Net income increased to 408.2 million ringgit from 245.5 million ringgit a year earlier, the bank said on Nov. 17.
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First Published: Wed, Jan 31 2007. 03 20 PM IST
More Topics: Money Matters | Mutual Funds |