KFH plans $300m fund, eyes Indonesian assets

Islamic fund manager KFH Asset Management will launch a $300 million fund to invest in consumer, healthcare and education businesses by end 2012, its private equity head said on Monday.

KFH Asset Management, a subsidiary of the Malaysian unit of Kuwait Finance House, would raise money from Gulf investors for the fund which would also invest in waste management and light manufacturing companies, Lew Oon Yew said.

Generally the deal flow is still very strong," he said.

He said KFH Asset Management also hoped to attract investors from Singapore and Japan, diversifying its investor base from the current Kuwait, Malaysia and Brunei funds.

The new fund would look to invest in businesses in Malaysia, Singapore, Thailand, Vietnam, Indonesia and China, he said.

"(In) Indonesia, we need to build up a stronger local presence for us to get a more robust deal flow out of the market," Lew said.

"The market is still very much controlled by big families and in order to penetrate the market, we have to get good local partners. That's something we've been working on for the last two years."

The new fund would invest in companies with enterprise value of about $100m, larger than the businesses previously invested in, he said.

It had previously made private equity investments in the education, food and beverage, light manufacturing and retail and distribution industries.

The Al Faiz Fund 1 Limited, which is managed by KFH Asset Management and Kuwait's Al-Aman , bought a 24.9 per cent stake in Singapore's Pacific Healthcare Holdings in 2009.

Lew said more private equity deals were expected to emerge in the region this year, as companies which had held back on raising capital return to the market although ample liquidity would increase competition for deals.

The Islamic private equity market was worth about $3 billion in 2009, compared to $2.2 trillion for global private equity. Shariah-compliant private equity has taken a hit in the Gulf, after a crash in real estate markets burnt investments.

Many Gulf investors are looking to Asian assets, with property markets seen likely to make a slow recovery. A Reuters poll in October had forecast that Dubai house prices would sink another 11 per cent before troughing in 2012 despite already having crashed 58 percent from their 2008 peak.