Asian Finance to set up RM1.5b aviation, property funds

ISLAMIC lender Asian Finance Bank will set up aviation and property funds with more than RM1.5 billion, aiming to capitalise on demand for alternative assets amid the global financial crisis.

As financial markets skid under growing fears of a global recession, some Islamic banks are ploughing on with expansion and fund-raising plans, reflecting a belief that the industry is relatively resilient to the meltdown.

Asian Finance, which is backed by Middle Eastern shareholders, is planning a Gulf aviation fund which could be denominated in the euro or dirham, Asian Finance chief executive Mohamed Azahari Kamil said in an interview.

It was too early to state the fund size, but it would probably be more than RM1 billion, he said, adding that the bank is working on the fund with some Gulf airport operators.

"Aviation has always been a growth sector, particularly in the GCC (Gulf Cooperation Council member countries), because we believe there's potential in the transport business," Azahari said.

"Because of the scarcity of liquidity, we need to also look at the possibility of doing a fund which is maybe non-US dollar denominated," he added.

Asian syariah banks are aggressively wooing Middle East investors who want their money to be invested according to Islamic principles.

Asian Finance said on Thursday that it will distribute a RM1 billion Islamic fund to allow Gulf investors to invest in companies in the Asean region.

The move came in the wake of a plan by the Singapore unit of Kuwait Finance House, Kuwait's largest lender by market value, to raise US$600 million (RM2 billion) in Islamic funds next year to buy ships, stakes in private firms and properties in Asia.

By Reuters