Fajr Capital exits Brunei bank

The 29.73% stake was acquired by Brunei Investment Agency (BIA), a government entity responsible for managing the country’s foreign exchange reserves and external holdings, for an undisclosed sum. Fajr invested in BIBD in 2010 as part of efforts to broaden the lender’s international reach. The Ministry of Finance currently owns 34%, the Sultan of Brunei’s charitable foundation has 25% and a further 11% is held by approximately 6,000 individual local shareholders.

BIBD was formed five years earlier through the merger of Islamic Bank of Brunei and Islamic Development Bank of Brunei. It is the country’s largest bank with total assets of B$10.1 billion ($7.5 billion) as of year-end 2018. BIBD claims to have more than 216,000 customers, 900 employees and 17 branches, as well as the largest ATM network in Brunei. Net profit came to B$147.9 million in 2018, up from B$116.2 million the previous year.

Brunei ranked ninth globally and number one in the ASEAN region in the 2018 Thomson Reuters Islamic Finance Development Report. The report estimates the global Islamic finance industry could be worth $3.8 trillion by 2023, compared to $2.4 trillion in 2017.

Fajr claims to have helped strengthen BIBD’s corporate governance and management team and implement a new value creation and growth strategy. This included a rebranding exercise, a redesign of the branch network, the introduction of internet banking, and international expansion in Southeast Asia and the Middle East. Net income more than doubled during the private equity firm’s holding period.

“BIBD is an example of Fajr Capital’s ability to structure attractive investment opportunities, develop and enable strong management teams, and support ‘domestic champions’ in their growth trajectory by creating enduring strategic, operational and financial value. Islamic financial services remains an important pillar of our investment strategy,” said Iqbal Khan, CEO of Fajr, in a statement.

BIBD also represented the first investment made by Fajr following its establishment in 2009. The firm targets high-growth companies in areas such as financial services, education, infrastructure, renewable energy, and manufacturing. BIA and Brunei’s Ministry of Finance are both shareholders in Fajr alongside Abu Dhabi Investment Council, Khazanah Nasional, and Middle East private equity firm MASIC.

The transaction means BIBD has returned to 100% local ownership. Last year, Brunei received international condemnation – including a call for a boycott of BIA-owned companies – following the introduction of new punishments under Sharia law, among them death by stoning for engaging in homosexual activity in public.

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• Topics
• Southeast Asia
• Trade sale
• Financials
• Brunei
• Fajr Capital
• Exit