By THE STAR
KUALA LUMPUR: Kuwait Finance House (M) Bhd (KFH Malaysia) continues to grow its investment in the local real estate sector as it has agreed to provide Corner Side Realty Sdn Bhd with a Mudharabah financing facility worth RM74.7mil.
Through the facility, Corner Side Realty will enter into an underwriting agreement with B U Development Sdn Bhd for the sale of 30 bungalows in Batu Uban, Penang.
Corner Side Realty is a unit of B U Development, which is developing a 28-acre freehold gated residential project known as The Sanctuary. Both companies are part of the Prima Prai group.
The underwriting agreement stipulates that any profit arising from the eventual sale of the bungalows to end-buyers would be distributed between KFH Malaysia and Corner Side Realty based on a predetermined profit-sharing ratio.
KFH Malaysia managing director Datuk K. Salman Younis said it was a very fair deal, but did not disclose the ratio.
“This transaction marks the first Mudharabah structure in Penang. It also reflects the bank’s move outside Kuala Lumpur where our name is synonymous with landmark projects,” he said before signing the agreement yesterday.
The Mudharabah facility also reflected KFH Malaysia’s commitment to increasing its investments in Penang and enabling the bank to further boost its presence in the state.
Towards that end, it would open a branch in Penang by March next year, Salman said. “We have already identified other sectors in Penang to invest in,” he added.
The Mudharabah is an Islamic financial instrument that allows selected developers to focus on core development activities via the arrangement with KFH Malaysia.
Prima Prai managing director Datuk Mohd Ramzan Ibrahim said the arrangement was a win-win for both parties.
“Corner Side Realty will be able to focus on the development of the property and KFH Malaysia will be able to assist us in marketing the units via its international network,” he said.
The three-storey bungalows will be launched before Chinese New Year and priced between RM2.2mil and RM4.9mil depending on land sizes, built-up areas and the views they command.
Meanwhile, Salman said the principles of Mudharabah had been adopted in the vehicle leasing business in Kuwait for 25 years.
“We can definitely bring it here very easily because we have the systems, support and knowledge but we cannot do so as a foreign institution due to the approved permit (AP) issue here.
“So, until we have access to AP, we cannot do it. But that model will greatly benefit consumers,” he said.