IDB fund has $750m at first close

The Islamic Development Bank fund is the successor to a $730m vehicle and is aiming to raise $2bn in total.

The Islamic Development Bank (IDB) Group has announced that its IDB Fund II has reached a first close on $750 million. The fund is aiming to achieve a final closing on $2 billion in early 2015.

Founding investors at first closing comprise: the Public Pension Agency of the Kingdom of Saudi Arabia; the Public Investment Fund of the Kingdom of Saudi Arabia; the Ministry of Finance of the Kingdom of Bahrain; and the Ministry of Finance of the Sultanate of Brunei Darussalam.

IDB Fund II is the successor to the $730 million IDB Infrastructure Fund I, which was also supported by Fund II’s founding investors. The fund achieved an internal rate of return of 18 percent and an investment multiple of 1.7 times having invested in the likes of AirAsia in Malaysia, Saudi International Petrochemical Company in Saudi Arabia and power assets in Pakistan, Oman and Jordan.

“Building on the successful track record of IDB Fund I, the IDB and founding investors are nearly tripling the size of the IDB Fund II to $2 billion,” said His Excellency Dr Ahmad Mohamed Ali, president of the IDB, in a statement.

“The fund will mobilise up to $24 billion of aggregate financing to support the development of key infrastructure projects in IDB member countries,” he added.

The fund will target a wide range of sectors, including core sectors of power, telecommunications and transport, and also covering oil and gas, refineries and petrochemicals, steel and aluminium, mining, logistics, healthcare, education and financial services.

The fund will make private equity investments in infrastructure-related projects in the IDB’s 57 member countries, which are spread across the Middle East, Asia and Africa.

The IDB was launched in 1975 to “foster the economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of Shari’ah, i.e. Islamic Law” according to the IDB’s website.

IDB Fund II will be managed by Bahrain-based ASMA Capital Partners, led by chief executive officer Mumtaz Khan, who also managed the first fund. ASMA includes representatives of the IDB and its founding investors on its board.