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Mon 17 Jan 2011 12:30 PM

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KFH plans $300m fund, seeks Indonesian assets

Asset management firm to invest in consumer, healthcare and education businesses by end 2012

KFH plans $300m fund, seeks Indonesian assets
sharia, Islamic finance, sukuk

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 $100 million, 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 percent

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.

Sharia-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 percent before troughing in 2012 despite already

having crashed 58 percent from their 2008 peak.

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