RIYADH, Oct 26 (Bernama) -- Khazanah Nasional Bhd has acquired a 10 percent stake in Saudi's Jadwa Investment, a Shariah compliant investment firm, for RM270.85 million in its long-term strategy to ride out the economic downturn and foster stronger ties between Malaysia and Saudi Arabia.

"We believe in Islamic finance and that it will certainly be part of the solution of these tumultuous time," Khazanah's managing director, Tan Sri Azman Mokhtar said at the agreement signing ceremony here, Saturday.

Jadwa is a premier fully Shariah compliant investment company counting from among its shareholders the leading Saudi business families and is chaired by Prince Faisal Salman Al Saud.

It was founded in 2005 and in the financial year ending 31 Dec, 2007, Jadwa recorded a commendable rate of return on equity of 21 percent and return on total assets of 13 percent.

Its services include investment banking and corporate finance, asset management and brokerage.

Azman said Khazanah's investment into Jadwa aims to provide cross linkages between Malaysian and Saudi Arabian businesses, laying the foundation for stronger economic cooperation between the two Muslim countries as well as supporting the aspirations of the Malaysian International Islamic Financial Centre.

Khazanah Nasional is the government's investment arm.

"During such times of a global economic crisis, one must look to strengthen alliances and friendships where we have mutually sound and beneficial business models and partners."

"This investment is an important milestone for Khazanah as it represents the continued strengthening of economic and bilateral relations between Malaysia and Saudi Arabia. We anticipate that, InsyaAllah, this signing is just the first step in a long and mutually supportive relationship," said Azman.

He added that coupled with Jadwa's strength of a sound and professional management team with the right experience in the business, Khazanah was confident that this investment would serve as an important bridge between the two countries to provide a two-way flow in capital, ideas and people for the people's mutual benefit.

In August 2006, the Malaysia International Islamic Financial Centre (MIFC) initiative was launched to promote Malaysia as a major hub for international Islamic finance.

The MIFC is a collaborative effort by the country's financial and market regulators, including Bank Negara Malaysia, Securities Commission Malaysia, Labuan Offshore Financial Services Authority (LOFSA) and Bursa Malaysia, together with industry participation from the banking, takaful and capital market sectors in Malaysia.