THE joint-venture syariah-compliant shipping fund by Kuwait Finance House Labuan (KFHL) and SFS Group Public Co Ltd, which will be available by the year-end, aims to ride on the next upcycle of the shipping industry.
KFHL, a wholly-owned subsidiary of Kuwait Finance House (Malaysia) Bhd, and SFS recently entered into an agreement to set up the fund via limited partnership in the Cayman Islands.
The targeted fund size of about US$150mil is to be managed by an equally-owned company acting as a general partner based in Cayman Islands.
The fund’s objective is to invest directly in shipping assets, primarily vessels.
All investments will require approval of Kuwait Finance House’s syariah committee.
Kuwait Finance House Malaysia deputy chief executive officer Ab Jabar Ab Rahman told StarBiz that the two partners held a long-term view of the maritime industry.
“Thus, we are positioning ourselves for the next upcycle when asset prices are low.
“We believe that this particular sub-sector (offshore) will continue to have commendable growth prospects in the medium to long term,’’ he said.
On investment in other shipping divisions, Ab Jabar said the tankers sector could also be considered and that it would be in line with their growth and value strategies.
“However, acquisitions in the container ship segment will be given thorough consideration as it poses certain syariah complications such as the element of uncertainty (Gharar).
“This is because we are not allowed to engage in the transportation of prohibited goods such as pork and liquor,” he said.
Kuwait Finance House Malaysia began operations in August 2005 and is a wholly-owned subsidiary of Kuwait Finance House K.S.C.
A full-fledged Islamic bank, Kuwait Finance House Malaysia has a paid-up capital of US$500mil and a further US$100mil in Tier II capital.
SFS is a leading non-bank financial institution in Cyprus, established in 1988. It is actively involved in financial services, capital markets and alternative investments.
SFS has been listed on the main market of the Cyprus Stock Exchange since 1999. Its total assets and shareholders’ equity at the end of 2008 were 303 million euros and 127 million euros respectively.