Prudential seeks tie-ups with foreign Islamic banks

Prudential seeks tie-ups with foreign Islamic banks
BY Jeeva Arulapalam Published: 2008/03/31

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PRUDENTIAL Fund Management Bhd (PFMB) is looking to tie up with three foreign Islamic banks operating in Malaysia, to offer Islamic funds, says its top official.

Distributing PFMB's products to onshore clients through these Islamic foreign banks is part of PFMB efforts to become the Prudential Group's syariah fund management hub.

"The first step is for our products to be accepted by these banks and distributed locally before we look to package it for distribution in the Middle East," chief executive officer Mark Toh told Business Times in an interview.

PFMB, which manages all syariah investments and insurance funds for the Prudential Group, is currently finalising a distribution agreement with one of the three Middle Eastern banks based here.



As at January 31 2008, its total onshore syariah funds under management were RM704.5 million.

Syariah investment director Zulkifli Ishak said the main challenge in attracting the Islamic banks to distribute their products was the different interpretations of syariah-compliant products domestically and in the Middle East.

"These banks look at the Malaysian products and their own interpretation before deciding on how to integrate the products with their respective interpretations," said Zulkifli.

The fund management company is also in the process of developing expertise to manage global sukuk funds from Malaysia.

"Hardly anyone offers it because there is very little expertise worldwide to manage such funds. So, we are building the resources now in terms of selecting fund managers, putting up a system to manage it and collating research on sukuk issuances," said Toh.

He said PFMB will depend on the group's overall network for research materials to structure products and portfolios customised for their clientele.

"Since we already have the global equity expertise, we are now focusing on the global sukuk expertise. Our asset management licence allows us to manage global sukuk funds and we should get this out in the next couple of months," said Toh.

PFMB currently manages offshore syariah funds amounting to RM249 million as at January 31 2008, consisting of fund mandates from Indonesia and Dubai.

"We are working towards managing more mandates coming from overseas, while locally we continue to manufacture innovative syariah products," said Toh, adding that PFMB will focus on launching more products in Indonesia, Malaysia and the Middle East.

Prudential was also recently voted best Islamic fund manager by the readers of Islamic Finance News.