A group of investors linked to local tycoon Syed Mokhtar Al-Bukhary and mainly from the Middle East are believed to be eyeing a controlling stake in Bank Muamalat, an Islamic bank in Malaysia, a report said today.

The Edge business newspaper said the group had sent out feelers to state-owned fund Khazanah Nasional Bhd with the view of acquiring its 70 percent stake in the Islamic bank.

It quoted a source as saying: "... the group has expressed interest and Khazanah will sell if the price is right."

The Edge said Khazanah is believed to be working out the valuations for Bank Muamalat which has shareholders' funds of RM347.8 million and assets of RM6.6 billion. The bank is believed to be worth about RM400 million.

41 branches

Syed Mokhtar would only play a small role as an investor with the large share of the financing coming from groups such as the Gulf International Investment Group, in which he is an equal partner with Mohamed Ali Alabbar, a Dubai-based businessman, it said.

This is not the first time investors have shown interest in Bank Muamalat, which has 41 branches. It is the smallest bank in Malaysia.

Last year The Edge reported that the Middle East's Dallah Albaraka Group conducted due diligence on the bank but the deal did not go through due to pricing differences.

Syed Mokhtar already has interests in the infrastructure, construction and utilities sectors. - AFP