Bank Islam to raise RM12mil for CMC Group

Bank Islam’s acting head of capital market Mohd Izhar Pawanchek (third from left) exchanging the document of mandate with CMC Group CEO Hazwan Alif Abdul Rahman (second from left) witnessed by the bank's chairman Datuk Zamani Abdul Ghani (first from left), CMC Group executive director Datin Adilah Abdullah (second from right) and the bank's deputy CEO Khairul Kamarudin (first from right)

PETALING JAYA: Bank Islam Malaysia Bhd is targeting to secure an investment of RM12mil to part-finance CMC Group Sdn Bhd’s RM23mil telecommunication integration project for the Ho Chi Minh City Urban Railway System (Line 1, Metro Line Project) in Vietnam.

This follows a signing mandate ceremony held on Monday between the bank and CMC Group for the company’s restricted investment account (RIA) facility via investment account platform (IAP).

Bank Islam is the sponsoring bank for the transaction.

The campaign period for this RIA transaction is targeted to be held for four weeks from mid April and the target for the successful conclusion of the transaction is by mid-May.

Bank Islam chairman Datuk Zamani Abdul Ghani in a statement said: “IAP is a very beneficial platform for businesses to realise their projects and ventures. Bank Islam actively seek new companies with viable projects in order to optimise our intermediation roles in managing funds for the best interest of both investors and funded companies.

"In line with the bank’s belief in the importance of social progress and environmental impact, this involvement in Vietnam’s Metro Line Project serves as a mean to contribute to the progressive growth of a modern urban environment while solving the city’s traffic congestion and environmental pollution problems.”

The Metro Line Project is Bank Islam’s second RIA via IAP transaction since the launch of IAP in 2016.

Vouched by previous track records, CMC has been entrusted by Hitachi Kokusai Electric Inc, the main telecommunication contractor of the project, to take on the telecommunication integration contract. 

Potential investors of this RIA transaction may find this project a viable investment as it has been awarded a credit rating of a3 by RAM Solutions based on CMC’s established track record and healthy financial profile, the transaction’s financing structure that minimises cash flow leakage, and the main contractor, Hitachi Kokusai, being a reputable global company with strong credit profile. 

The CMC RIA transaction is a relatively short investment with a tenure of 18 months should the potential investors invest in them. The expected return for the potential investors is 6.3% per annum with a minimum investment amount of RM5,000. 

As the sponsoring bank for the transaction, Bank Islam would underwrite the unsubscribed portion of the RIA should it not be fully subscribed by investors under the IAP. RIA is a new asset class which provides better returns to investors as compared to normal deposits. 

It provides a new avenue for investors especially high net worth individuals or angel investors to diversify their investment portfolio. Meanwhile, CMC Group CEO Hazwan Alif Abdul Rahman noted that the Metro Line Project was CMC’s inaugural overseas railway integration project and the beginning of its long-term investment into Vietnam. 

“The urbanisation megatrend and emergence of megacities, particularly in Asia-Pacific has intensified demand for public transportation. 

"Based on a study by PricewaterhouseCoopers, total cumulative investment in rail from 2015 to 2025 is expected to exceed US$2 trillion. We believe the availability of IAP will allow Malaysian businesses to collaborate with investors and financial institution to tap into this vast market,” he added.