Dubai-based Islamic investment firm Fajr Capital has bought a undisclosed minority stake in Bank Islam Brunei Darussalam (BIBD) making it the third-largest investor in the Asian bank.

It is the first stake purchase by Fajr Capital, which was launched in 2009, and has previous ties with BIBD.

Brunei's government has a 45 per cent stake in the bank, while the Sultan of Brunei's charitable foundation owns a 25 per cent stake.

Javed Ahmad, managing director at BIBD, declined to comment on the exact size of the deal or its value, but when talk surfaced last June that a stake sale might be in the offing, The Malaysian Reserve newspaper said the deal was estimated to be worth $200 million.

'The key strategic objective is to bring in international best practices to make the institution far more dynamic, domestically and internationally,' Ahmad said.

Brunei is increasingly becoming a market of interest for Islamic finance providers, with Islamic financial services making up 40 per cent of the Brunei market.

Ahmad said he expected Brunei's Islamic market share to reach around 50 per cent within the next five years.

BIBD, which is the largest financial institution in the country, is hoping to capitalise on that expected growth by becoming more competitive among the regional and international players already operating within the country.

Fajr Capital was launched with an initial funding of $600 million from shareholders including Malaysian sovereign wealth fund Khazanah Nasional, the Brunei Investment Agency and the Abu Dhabi Investment Council.-Reuters