Posted inBusiness moves

Malaysia’s Kenanga expands ETF biz with Valuecap acquisition

Valuecap intended to exit the asset management business.
Vector illustration of Kuala Lumpur Skyline

Kuala Lumpur-based Kenanga Investment Bank (KIB) has acquired i-Vcap Management via Kenanga Investors, its fully owned subsidiary, after it received approval from Malaysia’s Securities Commission, according to a Kenanga statement.

i-Vcap, which manages Shariah-compliant ETFs, is a wholly owned subsidiary of Valuecap. Valuecap has another asset management subsidiary, Vcap Asset Managers (VCAM), which manages wholesale funds.

KIB’s move comes after Valuecap announced in December 2019 that it had intentions of exiting Malaysia’s third-party asset management business.

At the time, Valuecap said that both i-Vcap and VCAM manage wholesale funds and proposed to terminate those funds. i-Vcap, meanwhile, was exploring various options for its ETFs, including the possibility of transferring the ETFs to another licensed fund management company.

Valuecap’s decision was an opportunity for Kenanga Investors to expand and have an established ETF business. In 2018, Kenanga Investors was already exploring opportunities in the ETF industry and partnered with Taiwan ETF specialist Yuanta Securities, with plans of launching new types of ETF strategies in Malaysia.

In January last year, Kenanga Investors made its foray into the ETF industry with the launch of its “OneETF”-branded leveraged and inverse (L&I) products, which were among the first L&I ETFs in Malaysia.

“[The acquisition] is a natural step in our strategy to develop products for a wider audience,” Chay Wai Leong, group managing director at KIB, said in the statement.

“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,” added Ismitz Matthew De Alwis, KIB’s CEO.

“The exercise adds depth to the company’s ETFs and Islamic product offerings, as well as accessibility to the US market.”

i-Vcap has five ETFs listed in Malaysia, three of which provide exposure to offshore markets. They are the MyETF Dow Jones US Titans 50, the MyETF MSCI South East Asia Islamic Dividend and the MyETF Thomson Reuters Asia Pacific Ex-Japan Islamic Agribusiness, according to data from Bursa Malaysia.

In Malaysia, there are 19 ETFs listed on the local bourse, which include six L&I products. While the industry continues to be small, domestic asset managers and the country’s securities regulator have made efforts to further develop the market.

This is the second asset management acquisition that KIB has made in the last 14 months. At the end of 2019, it acquired Libra Invest, which specialises in fixed income strategies, according to the statement.

Part of the Mark Allen Group.