PMB TIJARI EYES 20% REVENUE FROM ISLAMIC FINANCING

Kuala Lumpur : PMB Tijari Bhd, a newly set-up financial services arm of Pelaburan Mara Bhd, will begin operations this month and is targeting its Islamic financing portfolio to contribute 20% of its annual revenue over the next five years, said its chief executive officer (CEO) Tengku Ahmad Badli Shah Raja Hussin.

“We aim to grow our Islamic financing portfolio by targeting new bumiputera businesses or government-linked firms in the oil and gas (O&G), infrastructure, manufacturing and technology sectors,” he told The Edge Financial Daily in an interview. Since its launch by Deputy Prime Minister Tan Sri Muhyiddin Yassin on April 29, PMB Tijari has received several proposals for financing from RM 1 million to RM20 million. Some of the financing proposal being considered are investments in the fertilizer manufacturing equipment, logging equipment, supply of cloud-based applications, logistics and prime movers as well as off-shore transport services.

“We expect to provide financing for fertilizer manufacturing equipment worth RM20 million. The deal, which which falls under the Ijarah principle, is targeted  to be completed by the end of this year, ” sadi Ahmad Badli. PMB Tijari is evaluating a proposal to supply prime movers and containers for an international petroleum supplier in a deal worth RM 8 million. Another proposal involves financing a Malaysian company having logging business in Indonesia. Ahmad Badli described the funding model for this as “quite complex and challenging due to associated risks”.

“One [other] proposal that is being studied is for a RM 20 million lease of logging equipment  that will be operated in Kalimantan by early next year. The financing model is still being evaluated for which we may seek debt security and secured debt arrangement,” he said. Ahmad Badli said the company aims to maintain its asset quality by avoiding financing high-risk business. “We [PMB Tijari] do not impose any cap on our financing programme and our principle criterion is to see whether their proposed projects are backed by a contract awarded by either the government or reputable MNCs [multi-national companies]. Then, we look at their repayment capability as well as their fundamentals,” he said.

Ahmad Badli sees tremendous demand for financing business in this country. “Though sceptics views the leasing market crowded, we on the other hand see huge potential and growth as our segment is very niche and focused solely on Islamic financing services. We offer competitive profit rate calculated based on a risk-reward method that is benchmarked against the market’s cost of funds and other associated parameters,” he said.

Besides commercial bank as its main competitor,  PMB Tijari is up against commercial leasing companies such as Orix Leasig Malaysia Bhd, AEON Credit Service (M) Bhd and Hap Seng Credit Sdn Bhd, all of which have more than a decade of experience in the industry. With a RM 100 million capital injection, Ahmad Badli said about 90% of PMB Tijari’s business  will focus on commercial leasing, including car financing while the remaining 10% is geared for providing the capital requirement  for a company’s future growth.

PMB Tijari is managed by former bankers. Ahmad Badli was formerly the head of branch management in Kuwait Finance House (M) Bhd (KFH) and has held various serious management positions in HSBC Bank Malaysian Bhd. The company’s chairmain is former Bursa Malaysia Bhd CEO Datuk Yusli Muhammed Yusoff, while its head of operations, Norati Ibrahim, is a veteran in the automotive financing industry, with the previous stints at KFH and Malayan Banking Bhd.

“Our first phase of growth is to strengthen our domestic base and the start looking to mark a regional footprint in neighbouring countries with Indonesia as our immediate target, followed by Brunei, Thailand and Philippines,” said Ahmad Badli. It will laverage in its major shareholder, Islamic Corp, for the development of the private sector’s extensive network to expand its business into neighbouring countries in the next phase of growth.