Venturing into property development has transformed the earnings trajectory of an award-winning Malaysian Shariah compliant cooperative, which is looking toward maintaining a 10% payout for the fourth year running from investment returns using its members’ cash pool.
Koperasi Sahabat Amanah Ikhtiar Malaysia (Koop Sahabat) Financial Services General Manager Saifuddin Sulaiman told IFN Investor that the entity’s 2019 entry into property development has resulted in the real estate sector now contributing about two-third of its annual net earnings, which amounted to RM62.16 million (US$14.09 million) at the end of 2023.
The other third comes from the 34 Ar Rahnu Islamic pawnshop network across Malaysia, built up since the August 2012 establishment of Koop Sahabat – which was honored as the ‘Best Islamic Financial Cooperative 2024’ in the IFN Non-Banking Financial Institutions poll awards category.
Saifuddin said 2024 has been a good year for Koop Sahabat, which launched two affordable housing projects in the urban centres of Puchong and Putrajaya while declaring a third consecutive annual 10% dividend.
Operating as a cooperative, Koop Sahabat invests funds obtained from over 450,000 members – made up mainly of petty traders who receive financial support from Malaysian microfinancing outfit Amanah Ikhtiar Malaysia (AIM) as well as those associated with AIM’s operations.
Before the 2019 expansion into property development, Saifuddin said: “The average annual dividend then was about 5% and the management team who joined with me at that time decided to inject our collective work experiences to raise the earnings potential of Koop Sahabat.”
Following the initial successes, the cash value of assets had grown steadily and stood at around RM900 million (US$203.93 million) at the end of H2 2024. Saifuddin said the management’s target is to raise this AuM value to beyond RM1 billion (US$226.19 million) in 2025.
The current valuation of the property portfolio, parked under a separate legal entity, has surpassed RM1 billion and Saifuddin said Koop Sahabat aims to continue this growth momentum to ensure a stream of steady earnings for the cooperative’s members.
“We have to live up to the trust granted to us by our members, who are almost all entrepreneurial women supporting their families wholly or providing a supplementary income stream. It is an important part of our mandate to help reduce and eventually eradicate poverty in Malaysia.”
