Malaysia's PNB forms Japan's first syariah-focused fund

KUALA LUMPUR (Reuters) - Malaysia's largest asset manager Permodalan Nasional Bhd has partnered with Tokyo-based Inspire Corp to form Japan's first fund devoted to investing in Malaysian syariah-compliant firms.

PNB-Inspire Ethical Fund will start with 4.95 billion yen (S$60.8 million) and identify small-to-medium sized Japanese firms with potential for expanding to Islamic markets in ASEAN, according to a statement by Inspire Corp.

It hopes to rope in more regional banks to grow to 6 billion yen by the end of the year. Japan's Oita Bank and Hiroshima Bank are listed as limited partners for the fund.

Islamic finance is emerging as a popular entry point for global firms to tap into the growth of Muslim-majority countries within Asia.

Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group, last month established an Islamic finance arm in Malaysia to capture demand for syariah-compliant loans within Southeast Asia.