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Friday December 4, 2009

Bahrain’s Ithmaar Bank to invest in Malaysia

KUALA LUMPUR: Bahrain-based Ithmaar Bank is set to invest in Malaysia’s infrastructure, agriculture and hospitality sectors to pave the way for its regional expansion.

The investment bank, which has a stake in a Malaysian takaful company via an associate, will use funds from its clients in the Middle East and elsewhere to invest in these core sectors.

Chairman Khalid Abdulla-Janahi, without going into specifics, told StarBiz Ithmaar was in discussions with relevant parties and was confident the negotiations would bear fruit. He also declined to elaborate on the amount of investment in these sectors.

Khalid Abdulla-Janahi ... ‘We look at projects that not only will provide our clients with current income but also future capital appreciation.’

He added that there were plans for further investments in Malaysia.

“We look at projects that not only will provide our clients with current income but also future capital appreciation,’’ he said during an interview.

Apart from investing in Malaysia, Ithmaar would encourage Malaysian investors to invest in the Middle East, Khalid said.

“As one of the leading investment banks in Bahrain, we will invest on behalf of our clients based on their needs. Post 9/11, after the terrorist attacks in the United States, the direction of our investment has been Asia and the Far East.

“For us, the growth is in this region and in emerging markets due to their good economic prospects. Ithmaar will invest in Malaysia and use it as a platform to springboard to other regional markets,’’ he added.

According to Khalid, trade financing is another area it is looking at to facilitate financing for both buyers and traders.

Currently listed on the Bahrain and Kuwait Stock Exchanges, the bank has a paid-up capital of US$598mil and total equity worth US$1.1bil with operations in the Middle East and North Africa, as well as Asia and Europe.

Asked if Ithmaar was looking at increasing its stake in MAA Takaful Bhd, Khalid said it intended to do so as at the end of the day, it must be a win-win situation for both parties.

MAA Takaful is a 75:25 joint venture between MAA Holdings Bhd and Bahrain’s Solidarity Company BSC, a 40% unit of Ithmaar Bank.

Khalid said he understood that MAA Holdings and Solidarity were in discussions on the latter raising its equity stake in MAA Takaful.

The recent financial sector liberalisation plan increased foreign equity ownership limits to 70% from 49% for investment banks, Islamic banks, insurance companies and takaful operators.

On whether the Dubai World debt crisis had affected Ithmaar’s business as investor confidence had been shaken, Khalid said: “It basically affects everyone. Confidence will be strained and pricing of financing will also go up.

“Investors must not look at this incident in the short term but in the medium to long term. This is a liquidity issue and not a solvency one and I think there are business opportunities in the Middle East for investors to tap.”

The investment bank would also be undertaking a restructuring exercise that would transform it into the largest retail bank in Bahrain in terms of equity size. The exercise would be completed by the end of the first quarter next year, he noted.

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