KUALA LUMPUR: Valuecap Sdn Bhd, which is equally owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd and Kumpulan Wang Persaraan (Diperbadankan), plans to launch an Islamic exchange traded fund (ETF) with an initial public offering (IPO) in May this year to raise up to RM500 million.

According to its draft prospectus filed with the Securities Commission Malaysia yesterday, MyETF MSCI SEA Islamic Dividend will have a fund size of 500 million units with an initial issue price of RM1 per unit.

Valuecap said the fund will be quoted and traded on Bursa Malaysia three days after the initial subscription period is closed.

The initial subscription period will open from April 8 to 22, though it may be subject to postponement by the manager and the fund’s principal adviser.

i-VCAP Management Sdn Bhd, which is wholly owned by Valuecap, is the manager of the fund. CIMB Investment Bank Bhd is the fund’s principal adviser and placement agent, while CIMB Islamic Bank Bhd is the syariah adviser.

ValueCap said the fund is designed for investors seeking a medium- to long-term investment. It said the fund is also designed to cater for investors who wish to invest in a liquid financial instrument with an index-tracking feature that focuses on high dividend yielding syariah-compliant companies listed on the relevant exchanges.

“The fund is suitable for investors seeking a medium- to long-term investment in the constituent companies of the benchmark index as well as those looking for short-term arbitrage opportunities arising from the discrepancy between the net asset value per unit, and the trading prices of the units. Investors seeking to add geographical diversity to their investment portfolio may also invest in the fund,” it said.

MyETF MSCI SEA Islamic Dividend is aimed at providing investment results that closely correspond to the performance of the benchmark index, the MSCI South East Asia IMI Islamic High Dividend Yield 10/40 Index, the draft prospectus read.

“The benchmark index shall comprise up to 30 syariah-compliant companies listed on the stock exchanges in Southeast Asia countries with dividend yields that are at least 30% higher than the parent index yield that is deemed both sustainable and persistent by MSCI,” Valuecap said.

The parent index is the MSCI South East Asia IMI Islamic Index, an index provided by MSCI comprising the universe of securities from which the benchmark index is derived.

i-VCAP has obtained the commitment of the seeder, namely Valuecap, to seed RM20 million, which has been utilised to purchase the index securities constituting perfect baskets to facilitate the initial in-kind creation of 20 million units.

These perfect baskets will be made available for subscription by investors pursuant to the initial subscription.

Depending on the level of subscription by investors during the initial subscription period, any remaining units not subscribed by investors during the period will be delivered to the seeder.

This article first appeared in The Edge Financial Daily, on March 25, 2015.