Kuwait Fin to raise $600 million for Asia

By Daryl Loo and Liau Y-Sing

SINGAPORE (Reuters) - Kuwait Finance House (KFIN.KW: Quote, Profile, Research, Stock Buzz), the Gulf's third-largest lender, said on Tuesday it is aiming to raise $600 million in funds from Middle East investors in 2009 to buy ships, stakes in private firms and properties in Asia.

As global economies slow, The Islamic banking industry is at risk of being hit by falling property and commodity prices, as it depends heavily on these assets to underpin transactions. But Kuwait Finance sees the drop in markets as a chance to buy good assets at cheap prices.

"Of course raising funds is not going to be easy, but this is the best time because if you have the money, then things are very cheap," said the Islamic bank's Singapore chief executive Lim Boh Soon at the Reuters Wealth Management Summit in Singapore, referring to current market turmoil.

Lim, who previously headed Vietcombank Fund Management, said his office's first $100 million Asia Growth Fund will be launched in the first quarter of 2009, followed by a $300 million property fund, and a $200 million marine fund.

He said the Asia Growth Fund expects to take stakes of about 20 percent in 10 to 15 smaller companies in various sectors, and exit these investments when they go public.

Kuwait Finance House will seed 10 percent of each of the three Asia-focused funds with its own cash, and seek out investments from institutions, private banks, and ultra-rich individuals in the Gulf region, he said.

"I can tell you that for the next few months nobody is going to make any major decisions as we're still in the center of the storm. But they see opportunities," said Lim.

He added these opportunities are from across the region, noting particularly China and Southeast Asia, and expects to find value buys when U.S.-based firms hit by the credit crisis start to unload their non-core investments in Asia.

Islamic investments follow sharia, or Islamic law, and avoid interest-based lending as well as gains reaped from industries deemed to be harmful such as pornography and gambling.

BEAR TRAP

Lim said most of his own investments are in cash and equities and currently favors gold, and warned that the recent rebound in global equities was likely temporary.

"Personally I think it's a bear trap. This crisis is worse than the Asian financial crisis as it's on a global basis," he said, adding that he expects the downturn to last for the next 18-24 months.

But he was confident the global economy would bounce back in two years, led by the United States.

"There's one thing I respect about the Americans and it's their resilience, the way they bounce back. And because the world economy is so globalized, so intertwined, I think things can come back very quickly," Lim said. The former head of Asia private equity with Swiss bank UBS said he expects that when Kuwait Finance House's new close-ended funds mature in five to seven years, they will be able to generate a target of 20 percent returns.

"I am quite confident that toward the end of my fund-life, I'm at the right cycle. If you started a fund last year and you had loaded your portfolio, you're in deep trouble now," said Lim.

(Editing by Kim Coghill)