KUCHING: Islamic banking group Kuwait Finance House (Malaysia) Bhd (KFH-Malaysia) is making inroads into the country’s aquaculture sector via acquisitions of two aquaculture businesses namely KS Aquaculture Sdn Bhd (KS Aquaculture) and Ikmaju Sdn Bhd (Ikmaju).In a recent statement, Al Faiz Fund 1 Limited (Al Faiz), a shariah-compliant private fund jointly-managed by KFH-Malaysia’s licensed fund management subsidiaries and Kuwait-listed Al-Aman KSCC, entered into agreements to acquire a 60 per cent stake in both aquaculture businesses.
The development marked the fund’s initial investment in the local aquaculture industry and its third investment in Malaysia, by which it will create the largest marine fish breeding, hatchery and rearing operations in the country.
Both KS Aquaculture and Ikmaju own over 6,100 fish cages on a total area of over 142,000 square meters in Selangor and Johor, as well as 50 hatchery ponds on a total area of 50 acres. Currently, the businesses supply fish and fish products to local markets in Selangor, Kuala Lumpur, Perak, Melaka and Johor as well as exporting to China, Hong Kong and Singapore. Their main products include seabass, red snapper, silver pomfret, grouper, king grouper and tiger grouper.
According to its asset management unit’s (KFH Asset Management Sdn Bhd) head of private equity Lew Oon Yew, the demand for marine farm-cultured seafood has been growing steadily in the region due to the depletion of sea catches, higher income growth and health awareness.
“Malaysia has natural competitive-advantage to further grow the sector due to its rich coast line, weather conditions as well as accommodative agricultural policies. Our immediate focus is to develop the core marketing and distribution network so as to expand the group’s (KS Aquaculture and Ikmaju) market reach, to provide better services and product consistency,” he said.
Lew also pointed out that this growth will be complemented by downstream expansion into processing via organic expansion, acquisition or joint-ventures.
“In order to ensure that the seafood livestock are sustainably cultured, the group has expanded upstream into developing the hatchery and production of feedstock. These initiatives will give them better control over the value chain and consequently, assurance on freshness and quality of its seafood products.
“As an on-going plan, the group will also continue to expand its capacity, in-line with the growing demand for marine seafood both locally and in export markets.”
As an Islamic private-equity fund, Al Faiz offers the advantage of an ethical investment product with high performance, portfolio diversification, superior risk-adjusted returns and diverse investment opportunities.
Launched in Labuan in 2008, the fund focuses on medium-sized businesses, with sales of around US$10 million (RM33.8 million) to US$100 million (RM338.1 million) per annum, in resilient industries such as education, healthcare, food and beverage, light manufacturing, retail and distribution, consumer products as well as environmental management.
Al Faiz managed to draw some of the largest institutional and high net-worth individual investors from the Gulf countries and Asia. To date, seven investments have been completed in Asia by the fund namely in Malaysia, India, Singapore, Philippines and China. Investments in Malaysia are Hospitech Manufacturing and Marketing Sdn Bhd and United More Sdn Bhd.