MALAYSIA: Kenanga Investment Bank, Malaysia’s largest independent investment bank, has acquired ValueCAP’s wholly owned Islamic asset management subsidiary i-VCAP Management. The acquisition comes more than a year after ValueCAP announced its plans to exit the third-party asset management business and divest or fully shutter i-VCAP’s operations.
A major player in Malaysia’s Shariah compliant exchange-traded fund (ETF) sector, i-VCAP manages four of the five Islamic ETFs listed on Bursa Malaysia, collectively referred to as MyETFs. One of them, the MyETF Dow Jones US Titans 50 Fund rolled out in 2018, was the first US dollar-denominated Shariah ETF in the country, while its flagship MyETF Dow Jones Islamic Malaysia Titans 25, launched in 2008, was the first Shariah ETF listed in Asia.
“We foresee that [i-VCAP] will broaden our geographical reach, product suite and investment expertise … The exercise adds depth to the company’s ETFs and Islamic product offerings as well as accessibility to the US market,” said Chay Wai Leong, the group managing director of Kenanga Investment Bank.
The Islamic asset manager has a storied past. ValueCAP first announced that it had sold its entire stake in i-VCAP in August 2020 to Kenanga Investors, Kenanga Investment Bank’s securities management arm, at the time pending regulatory approvals.
The sale had followed i-VCAP’s announcement in April 2020 confirming the termination of its MyETF Thomson Reuters Asia Pacific Ex-Japan Islamic Agribusiness fund, which was first launched in 2015, as the fund was too small in size while having a high (and increasing) total expense ratio.
The termination of the ETF itself was first announced in 2019, the same year that Zulkifli Ishak, i-VCAP’s head of business development at the time, moved to Kenanga Islamic Investors as its executive director and CEO.
Malaysia is an important Islamic ETF market, with its robust ETF regulations, coming in close on the heels of Iran, the largest market for Islamic ETFs. Aside from the five listed Islamic ETFs on Bursa Malaysia, it is also home to Zurich Takaful Shariah Edge Fund, a multi-sector ETF rolled out in July 2020 as a partnership between Zurich Takaful Malaysia and Ireland’s BlackRock Asset Management.