Middle East group keen to invest in Malaysia

Middle East group keen to invest in Malaysia

By B.K. SIDHU

KUALA LUMPUR: The Asian Finance Bank (AFB) has a group of Middle East investors who are keen to buy into Malaysian equities and real estate, and be involved in some development projects.

Stakes in government-linked companies (GLCs) that would be divested by the Malaysian Government were among the equities that the funds were eyeing, said AFB chief executive officer Faisal Alshowaikh.

AFB, which is set for a formal launch tomorrow, is working towards introducing more than 15 new products by the third quarter this year.

Besides catering to the local demand for retail, corporate, treasury and structured products, some products would be targeted at Middle East investors who wanted exposure to Malaysia and regional equities, real estate and projects.

“We will invite the Middle East investors to participate in some of the structures and products that we would be coming up with,” Faisal told StarBiz in an interview. He is gung ho that the funds would invest here and the region but would not commit to a timeframe for this to happen.

Faisal Alshowaikh
There is excess liquidity in the Middle East looking for investment opportunities in Asia. And Malaysia’s move to issue three licences to foreign banks serves as a platform to attract these funds.

Some money has made its way here; one recent investment is the purchase of the Four Seasons Resort in Langkawi by Saudi Prince Alwaleed Bin Talal Bin AbdulAziz AlSaud for RM435mil.

According to Faisal, AFB also wants to work with Malaysian financial institutions in strategic partnerships to tap the Middle East as the bank brings “value, strength and distribution capabilities” and can serve as a “conduit between the Malaysian institutions and Gulf investors”.

“We have begun working with some local banks and would like to expand our strategic partnership with more local banks,” he said, but declined to name them.

Barely three months since its soft launch, AFB had been approached by some parties “to do transactions and we should see some (tangible) results in the second to third quarter of 2007,” he said.

And unlike its foreign rivals in Malaysia, AFB just wants to build on a seven-branch network over the next five years. This is in huge contrast to Al Rajhi Bank and Kuwait Finance House (M) Sdn Bhd, which are planning for a 50-branch network each.

“We work on a different model. Our focus is corporate and investment banking and that would make up 60%–70% of our business, with the remaining in retail. That is why we do not need a large branch network,” Faisal said.

The bank now offers three types of retail products but that would be expanded. It also plans to add a branch this year to its current base in Jalan Sultan Ismail, Kuala Lumpur.

Malaysia will remain its Asian hub but AFB plans in the short- to medium-term to open offices in Singapore, Brunei and Indonesia. It also wants to tap opportunities in China, Japan and Vietnam.

And like any other bank, AFB faces the same challenges of getting the right talent to expand.

“Finding the right opportunity to invest is a challenge. It has to be a ringgit transaction to avoid any foreign exchange risk and real estate investment should give decent returns,” Faisal said.

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