KUALA LUMPUR (Feb 2): Kenanga Investment Bank Bhd is acquiring Shariah-compliant investment management services provider i-VCAP Management Sdn Bhd as it looks to develop new investment solutions to capture a wider audience.

i-VCAP primarily focuses on Islamic exchange-traded funds (ETFs).

Kenanga Investment Bank group managing director Datuk Chay Wai Leong said the acquisition will further expand the group's ability to build better, more diversified portfolios through its product capabilities across the group, and enhances the range of solutions available.

"The ETFs market is one of the fastest-growing segments in asset management. A number of long-term macro trends, including the increasing use of passive vehicles and the driving force of digitalisation, will lead to a growing demand for ETF products.

"This addition strengthens our competitive edge in addressing client needs, which will further accelerate the growth of our business," he said in a statement today.

The acquisition was done via Kenanga Investment Bank's fully-owned asset management firm Kenanga Investors Bhd (KIB) following approval by the Securities Commission Malaysia.

However, the press statement today did not reveal the price of the acquisition.

It marks the group's second venture into the ETF space, a year after it introduced OneETF, Malaysia's first KLCI-linked leveraged and inverse ETFs, together with its strategic partner Yuanta Securities, the largest ETFs provider in Taiwan.

KIB chief executive officer Ismitz Matthew De Alwis said the expansion will add depth to the company's ETFs and Islamic product offerings as well as accessibility to the US market.

"i-VCAP's ETFs business is highly complementary to OneETF by Kenanga as we foresee that it will broaden our geographical reach, product suite and investment expertise, enabling us to provide more solutions to help clients achieve their investment objectives," he said.

"Simultaneously, KIB is set to leverage upon this opportunity to further build on its existing ETFs business with a higher degree of economic scale for a more diverse range of ETFs by working with its partners, regulators and other service providers to drive the ETFs and Islamic capital market," De Alwis added.

In 2019, KIB acquired Libra Invest Bhd, which was a fund management arm of ECM Libra Financial Group Bhd, for RM50.6 million.

Barely a year after the acquisition, Kenanga Investment Bank sold off Libra Invest, whose assets it had stripped down for consolidation with its asset management arm, for RM10.75 million to Ericsenz Partners Sdn Bhd.

Following a business transfer process that was completed in late November 2019 — whereby certain assets, liabilities and undertakings were transferred to KIB — Kenanga Investment Bank's cost of investment in Libra Invest was reduced from RM50.6 million to RM15.6 million.

As a result, KIB had booked a pro forma gain of RM4.21 million from the disposal.

At Bursa Malaysia's noon break, shares of Kenanga Investment Bank were up 10 sen or 7.46% at RM1.44 with a market capitalisation of RM1.04 billion.