Islamic Investor: Islamic Investor: - Islamic Finance News

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CASE STUDY Executive chairman of APFT, Faruk Othman (Second from right), Bank Islam managing director, Zukri Samat (Centre) and APFT’s board members at the launch of the company’s prospectus. An initial public offering (IPO) advised by an Islamic commercial bank A case study by Bank Islam Malaysia Bank Islam achieved another fi rst in the corporate fi nance industry on the 18 th March 2011 when it successfully listed fl ight training academy APFT on the Main Market of Bursa Malaysia. As the principal adviser for the IPO, Bank Islam’s management and the corporate fi nance team were understandably pleased with the successful debut of APFT, the fi rst IPO to be advised by an Islamic commercial bank. Bank Islam’s journey towards this milestone was by no means easy. To begin with, commercial banks (of which Bank Islam is one) are not traditionally considered the correct institutions to undertake corporate equity transactions. Corporate fi nance transactions are very much the forté and business of investment banks. Thus initially, the team had a tough time procuring mandates and one of the recurring challenges was to convince potential clients of the bank’s ability and capability in advising on IPOs and other corporate fi nance transactions. Putting the corporate finance team together… The journey began in 2007 when the Capital Markets and Services Act 2007 opened up the corporate fi nance services sector to certain registered persons, including Islamic banks. Seeing an opportunity to extend its range of corporate and investment banking services, Bank Islam commenced the recruitment of experienced professionals and set up its corporate fi nance department in January 2008. In May 2009, the Securities Commission of Malaysia (SCM) issued Principal Adviser Guidelines which set out the requirements for principal advisers to be eligible to submit applications to the SCM for certain types of corporate proposals, including IPOs (Approved List of Principal Advisers). One of the key requirements of the list is to have qualifi ed senior personnel with the requisite years of relevant corporate fi nance experience, who have played key roles in a specifi ed minimum 18 September 2011
CASE STUDY Presentation of plaques to the members of the Due Diligence Working Group for the APFT Berhad listing number of proposals involving IPOs, signifi cant acquisitions or regularization plans by fi nancially distressed companies and cash companies. Meeting this requirement did not pose much of a challenge, as from the outset Bank Islam has always recognized the importance of hiring experienced talent in order to be able to offer service quality of the highest level. With the requisite team in place, Bank Islam was successfully admitted to the SCM’s inaugural approved list of Principal Advisers in August 2009. Currently, Bank Islam is the only Islamic commercial bank to have gained admission to this approved list. Implementing key internal processes… Having the right team was just the beginning. Internal policies and processes then had to be formulated and implemented to guide and govern the activities of the corporate fi nance department. within the corporate fi nance department to ensure clear and proper segregation of duties and information from other departments/divisions in order to maintain the confi dentiality of sensitive information. (iv) Underwriting — Any proposed underwriting of IPOs (as was the case for APFT) are subject to thorough due diligence and risk assessment prior to submission to the relevant committees of Bank Islam for approval. First IPO a success… To date, APFT is the only listed company in the region providing fl ight education and training services. Bank Islam was the managing underwriter, underwriter and placement agent for APFT’s IPO. Applications for APFT shares by the Malaysian public at an issue price of RM0.50 (US$0.17) per share were oversubscribed by 12.09 times. As at the 24 th August 2011, the price of APFT shares stood at RM0.70 (US$0.24). (i) Shariah compliance — One of the key processes is to ensure the client is Shariah compliant, primarily in terms of activities and income generation. For Bank Islam’s IPO clients, the corporate fi nance department applies a standard set of criteria laid out by the Shariah Advisory Council of the SCM to determine Shariah compliant status. Prior to the submission of any application to the SCM, the approval of Bank Islam’s own Shariah Advisory Council is also sought to confi rm that the IPO client is Shariah compliant. Ultimately, fi nal confi rmation of an IPO company’s Shariah compliant status will come from the SCM’s Shariah Advisory Council. (ii) Regulatory framework — All corporate fi nance personnel must be familiar with and conduct their activities in accordance to the current regulations released by the regulatory authorities which govern the corporate fi nance department’s activities. (iii) Chinese wall — Policies and procedures must be in place From left to right: APFT directors Suhaimi Abdul Ghani, Mohd Khalid Ali, Faruk Othman, Bank Islam managing director, Zukri Samat and APFT director Tony Tan Nyap Keong at the launch of its prospectus. September 2011 19
Page 1 and 2: September 2011 Islamic Investor: Eq
Page 3 and 4: EDITOR’S NOTE Supplements Editor
Page 6 and 7: COVER STORY Equities Vs. Commoditie
Page 8 and 9: COVER STORY futures market to estab
Page 10 and 11: FEATURE investments in Islamic REIT
Page 12 and 13: Global industry One publication Est
Page 14 and 15: FEATURE or country-focused ETFs, wh
Page 16 and 17: FEATURE Source: Eurekahedge conduci
Page 18 and 19: CHAPTER Islamic Hedging & Risk Mana
Page 23 and 24: STATEMENT Beyond Banking Global Isl
Page 25 and 26: CHAPTER World Islamic Index’s out
Page 27 and 28: RESULTS Crème de la Crèmé The in
Page 29 and 30: RESULTS Best Asset Management Compa
Page 31 and 32: RESULTS Best Real Estate Investment

Islamic Investor: Islamic Investor: - Islamic Finance News

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