Prudential launches Islamic asset management business in Malaysia

The new unit aims to create a stronger focus on the firm's Islamic institutional business, both onshore and offshore.

Prudential yesterday launched Prudential Al-Wara' Asset Management (Pru Al-Wara'), its first dedicated Islamic asset management business. Zulkifli Ishak becomes chief executive and chief investment officer, moving from his previous post as director of sharia investment at Prudential Fund Management in Kuala Lumpur.

Headquartered in Kuala Lumpur, Pru Al-Wara' will manage sharia-compliant assets on behalf of institutional investors, as well as onshore and offshore institutional mandates. The firm will target the sharia institutional asset management market alongside Malaysia's plans to expand its position as a leading international Islamic finance centre.

The move looks to be a vote of confidence in Kuala Lumpur's bid to become the Asian hub for Islamic finance and investments, a title also sought by Singapore and Hong Kong.

"We launched the new business to provide focus in managing Islamic institutional mandates," says Mark Toh, head of Islamic fund management at Prudential Corporation Asia in Kuala Lumpur. He is also the Malaysia chairman of Prudential Fund Management, the firm's conventional asset management business, which focuses on the Islamic retail business.

It made sense to set up in Kuala Lumpur, as Prudential already has Islamic fund management capabilities and an Islamic insurance, or takaful, business there, says Toh. Moreover, Malaysia has a well respected sharia legal structure, recognised sharia scholars and a well-established Islamic investing infrastructure, he adds. There is also a greater total AUM in Islamic investments in Malaysia than in Singapore, for example.

Prudential already has an established infrastructure and staff in backroom operations, product development and investment expertise, and it will leverage on these.

Toh says the business is expected to grow very quickly. Total global Islamic assets are forecast to grow by 20% a year, according to a late-2008 report from Bank Negara, the Malaysian central bank, and Toh says Prudental expects to exceed average market growth. Current total Islamic assets globally are estimated at $1 trillion.

The launch of Pru Al-Wara' was officiated by Tidjane Thiam, group chief executive of Prudential; Barry Stowe, chief executive of Prudential Corporation Asia; Arne Lindman, chief executive of funds at Prudential Corporation Asia; Mark Toh; and Zulkifli Ishak. Prudential chairman Harvey McGrath and the other directors of the group also attended the event.

Prudential's existing Islamic finance platform includes nine Islamic mutual funds for retail investors and an additional range of onshore and offshore institutional mandates. Prudential is also one of Asia's largest writers of new business for Islamic insurance products, with operations in Malaysia and Indonesia. As of 30 September, Prudential had M$1.5 billion ($438 million) in Islamic funds under management in Malaysia.

Prudential Corporation Asia comprises the life insurance, asset management and consumer finance operations of Prudential in Asia. The businesses span 13 markets: mainland China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, the United Arab Emirates and Vietnam.

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