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The Board of Directors (“Board”) of AFFIN is pleased to announce the signing of a joint venture agreement (“JVA”) on 6 March 2007 between AFM, a wholly-owned subsidiary of AFFIN Investment Bank Berhad, (which in turn, is a wholly-owned subsidiary of AFFIN) and AEP, for the purpose of collaborating and sharing each other’s expertise and network to establish and set-up a RM150 million commercial property fund (“Proposed Fund”) within the prime or central locations in Malaysia.

Pursuant to the JVA, AFM and AEP intend to jointly establish and set up the Proposed Fund. The Proposed Fund shall be incorporated as a closed-end investment company in Malaysia and will seek to acquire commercial properties with strong potential for growth in rental income and capital value. The Proposed Fund shall comprise equity investment of RM150 million with a duration not exceeding five (5) years.

Under the Proposed Fund, AFM will act as the Fund Manager whilst AEP will act as the Portfolio Advisor.

The JV would not involve any capital investment by AFM as there would not be any joint venture company to be incorporated.

The salient terms of the JVA includes:

(a) The JVA is conditional upon satisfaction of the following conditions precedent:

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  (i) all the approvals, if required of AFM’s board of directors, shareholders, Securities Commission and / or any other authorities; and

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  (ii) all the approvals, if required of AEP’s board of directors, shareholders and / or investment committee or other relevant authority.

AFM is a licensed fund management company under the Securities Industry Act 1983 and is primarily involved in asset management. AFM’s authorised share capital is RM25,000,000, comprised of 23,000,000 ordinary shares of RM1.00 each and 2,000,000 redeemable preference shares of RM1.00 each. The issued and paid-up share capital of AFM is RM12,000,000 of which 12,000,000 ordinary shares of RM1.00 each have been issued and fully paid-up as at 31 December 2006.

AEP is a private limited company incorporated in Malaysia under the Companies Act 1965 and is primarily involved in property investments. AEP is wholly-owned by AsiaEquity Partners Pte Ltd ("AsiaEquity"), an exempt fund manager and exempt corporate finance advisor incorporated in Singapore with focus on real estate assets and structured finance products. AsiaEquity has todate executed more than RM1.5 billion worth of real property transactions in South East Asia.

The JV is in line with AFM’s desire to expand its fund management product portfolio and marks AFM’s entry into private equity fund management business including real estate and other asset classes.

With this JV in place, AFM is expected to further develop similar private equity initiatives in time to come, not only to provide investors with broader investment opportunities but also with higher than normal returns on investments.

The JV will not have any effect on the issued and paid-up capital of AFFIN, including the substantial shareholding of the Company and gearing ratio. The proforma effects on the consolidated net assets of AFFIN based on the financial year ended 31 December 2006 are expected not to be material. The effect on the earnings of AFFIN for the financial year ending 31 December 2007 is also not expected to be material.

None of the directors and major shareholders of AFM or persons connected to them has any interest whether direct or indirect, in the JV.

The Board of Directors of the Company is of the opinion that the JV is in the best interest of the Company.

The JV is subject to the following approvals being obtained:

(i) AFM’s Board, shareholders, the SC and / or any other authorities, if required; and

(ii) AEP’s Board, shareholders and / or investment committee or other relevant authority, if required.

By undertaking the JV, it is expected that the prospect of AFM would be positive as the JV will serve as a platform for AFM to further expand its products and services and hence is expected to contribute positively towards enhancing its earnings base.

The JV will not expose AFM to any new risks that are already present in the existing business activities of the AFFIN Group.

The JVA will be available for inspection at the registered office of AFFIN at 7th Floor, Chulan Tower, 3, Jalan Conlay, 50450 Kuala Lumpur during normal office hours from Mondays to Fridays (except for public holidays) for a period of one (1) month from the date of this announcement.