The President of the Islamic Development Bank (IDB) Group, announced on Thursday the launch of the US$2 billion Islamic Development Bank Infrastructure Fund II (the IDB Fund II) on the occasion of the 40th anniversary of the IDB.
The IDB Fund II has several cornerstone investors in 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. They have invested aggregate commitments of nearly US$750 million for the first closing. A final closing with additional investors is targeted for early 2015.
The IDB Fund II is the successor to the US$730 million IDB Infrastructure Fund I (the IDB Fund I), also supported by the same founding investors.
The first fund achieved an IRR of 18 percent and an investment multiple of 1.7 times from investments in AirAsia in Malaysia, Saudi International Petrochemical Company (SIPCHEM) in Saudi Arabia and AES Oasis Ltd with power assets in Pakistan, Oman and Jordan.
Ahmad Mohamed Ali, President of the Islamic Development Bank (IDB) Group said:
"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. The fund will mobilize up to $24 billion of aggregate financing to support the development of key infrastructure projects in IDB member countries."
IDB and the founding investors have established ASMA Capital Partners BSC, based in Bahrain, as a multi-fund asset management platform to manage the IDB Fund II.
The Chairman of ASMA Capital is the President of the IDB Group and the Vice Chairman is Mohammed Al-Kharashi, the Governor of the Public Pension Agency of the Kingdom of Saudi Arabia. Members of the board of directors are Abdullah Al Ayadhi representing the Public Investment Fund (KSA) and Sami Humaid representing the ministry of finance of Bahrain.
"ASMA Capital is expected to play a significant role in assisting pension funds and other global investors seeking to deploy capital into infrastructure projects in select emerging markets for portfolio diversification and stable return."
The IDB Fund II will have a broad sectorial focus beyond core infrastructure sectors of power, telecommunications, transportation, and will include investment in oil and gas, refinery and petrochemicals, steel and aluminum, mining, logistics and an allocation for healthcare, education, and financial services.