Transcript Slide 0

Islamic Development Bank
Impact Investing
KAZANSUMMIT 2015
7th International Economic Summit of Russia and OIC countries
Tatarstan – June 15-16, 2015
Mohamed Hedi Mejai, Director of the Investments Department
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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Impact Investing..
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Impact investing is a subset of socially responsible investing
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It is investment made with the intention to generate a
measurable, beneficial social or environmental positive
impact alongside a financial return
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Islamic Finance or ethical finance is fundamentally motivated by
supporting the overall well-being and socio-economic
development of the society and excludes investments in areas
considered harmful to society or people
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And hence, it is very much in line with impact investing
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Suitability of Islamic Banking Products to Impact Investing
Islamic Finance is based on the following principles:
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Investment in assets – real economy
Fairness – sharing in the risk and reward
Participatory financing – equity-based, venture capital, etc.
Avoidance of speculation and abuse – prohibition of charging
interest and excessive financing rate
Flexible contractual arrangements – Encouraging entrepreneurship
Negitive List of industries that are harmful to society or health
(gambling, alcohol, arms, etc.)
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Islamic Finance is gaining global attraction
According to the last IMF workshop on Islamic Finance during the WB/IMF
Spring meetings 2015
• Islamic Finance is growing at 16% p/a and its total assets reached about
USD 1.7
• It is expected to grow to USD 3.4 trillion by 2018
• Currently Islamic Banks have 38 million customers and expected to reach
more than 70 million by 2018
• QISMUT (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey) are
dominating the Islamic Banking assets with 78% of global value
• QISMUT total assets expected to reach USD 1.6 trillion by 2018
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Potential of Islamic Finance
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Availability of high liquidity
Can meet the demands of diverse population (i.e. Muslims and nonMuslims)
• Sukuk (i.e. Islamic bonds) are widely accepted and is an additional
tool for resource mobilization
• Many non-member countries issued sukuk such as Hong Kong,
Luxemburg, UK, etc.
• Investment in Infrastructure projects
Wider acceptance of Sukuk and global opportunities for more issuance
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Islamic Finance in Russia
Russia has a good potential to develop Islamic Finance in CIS region
and to attract a wide range of investors:
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Strong economy with a large absorption capacity
It is a large market with about 145 million population out of which
about 20 million are Muslims
It is a main driver of the Eurasian Economic Union (EAEU) which
has a total population of about 180 million and a gross domestic
product of over 4 trillion U.S. dollars
Islamic Finance is attractive to customers interested in ethical
investing
Hence, sukuk issuance in Russia for instance are likely to get good
attraction from investors
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Islamic Development Bank (“IDB”): Profile
Overview
Key Financial Indicators
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Established in 1975 and headquartered in Jeddah, the Kingdom of Saudi
Arabia
(US$ billion)
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Purpose: To foster the economic development and social progress of
member countries in a commercially viable manner
Total Assets
20.6*
Authorized Capital
150.0
Paid-up Capital
7.4
Ratings
Aaa/AAA/AAA
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Currently 56 member countries (all developing countries) from the Middle
East, Africa, the Asia Pacific region, South Asia, Europe and South America
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Regional offices in Kazakhstan, Malaysia, Morocco and Senegal
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Country gateway offices in Turkey and Indonesia
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Field representatives in several member countries
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All financial transactions are in compliance with Islamic law (Shariah)
Ownership
“We are committed to alleviating poverty, promoting human development,
science & technology, Islamic banking & finance and enhancing cooperation
amongst member countries in collaboration with our development partners.”
Saudi
Arabia
23.6%
Others
17.1%
Mission Statement
Kuwait
5.5%
Turkey
6.5%
Notes:
 IDB’s unit of account 1 Islamic Dinar = 1 Special Drawing Right of the IMF
Exchange rate of ID 1 = US$ 1.531750 used throughout this presentation
 IDB’s financial year is the lunar Hijrah year (11 days shorter than the solar Gregorian year)
 Throughout the presentation, Financial data are based either on Audited Accounts Year-End November 2013 (*) or
public information shared in IDB’s website for Year-End October 2014 unless otherwise stated.
Libya
9.5%
Egypt
7.1%
Qatar
7.2%
Iran 8.3%
UAE
7.5%
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Nigeria
7.7%
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IDB Group and Mandate
IDB Activities
IDB Priority Areas
■ Project Finance, Loans and Technical Assistance aimed at the
development of:
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Agriculture
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Basic Infrastructure & Industrial sectors
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Education
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Healthcare and other Social Sector Institutions
■ Equity Investment and Lines of Financing for the development
of Financial Institutions
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Human Development
Agricultural and Rural Development and Food Security
Infrastructure Development
Private Sector Development (ICD)
Intra-Trade Among Member Countries (ITFC)
Research and Development in Islamic Banking and Finance
(IRTI)
Key IDB Group Members*
■ International Islamic Trade
Finance Corporation
(ITFC):
Supports trade finance
activities amongst member
countries.
■ Islamic Corporation for the
Development of the Private
Sector (ICD):
Supports the private sector in
the member countries.
■ Islamic Corporation for
■ The Islamic Research and
Insurance of Investment and
Export Credit (ICIEC):
Provides investment protection
and export credit insurance for
member countries.
Training Institute ​(IRTI):
Leads the development and
sustenance of a dynamic and
comprehensive Islamic
Financial Services Industry.
* These institutions have their own separate balance sheets and member countries except IRTI.
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Consistently Rated ‘AAA’ Since 2007
IDB’s ‘AAA’ rating is predominantly derived from its standalone credit profile in contrast to
other multilateral development banks’ (“MDB”) reliance on ‘AAA’ rated callable capital
“Low leverage…”
(Since 2006)
Last Rating: Oct. 2014
“Very strong capitalization…”
“Established track record in terms of
asset quality…”
Accepted as marketable assets in the European
Central Bank (ECB) list
“Preferred Creditor status…”
“Strong commitment from
shareholders…”
(Since 2007)
Last Rating: July 2014
“Strong liquidity…”
(Since 2002)
Last Rating: Sep. 2014
Zero Risk Weighted
Eligible as Level B collateral for the Bank’s operations
Eligible for inclusion in the liquidity buffer of banks
under the FCA supervision
(BIPRU 12.7.2 )
Source: Rating Agencies Reports
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Strengthening Partnerships
IDB Approvals for Co-Financing ($ in mln)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
■ Co-financing activities, on average, represent 35% of IDB-OCR cumulative financing.
■ The Bank collaborates with development partners and donors to co-finance projects and operations in member countries.
■ This collaborative strategy has helped it to pool and tap resources from a large number of organizations and institutions which are
interested in jointly financing development.
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IDB’s Intervention Areas and Regions
Geographic Distribution
Sectoral Distribution
Water, Sanitation &
Urban Services
13.2%
Others
0.4%
Agriculture
11.9%
Education
7.4%
MENAOther
Countries-8
19%
SSA-22
14%
Asia-8
6%
MENA-GCC6
10%
Transportation
21.8%
Information &
Communications
1.1% Industry &
Mining
7.7%
Energy
26.4%
Health Finance
5.6% 4.5%
MENANorth
Africa-5
20%
CIT-7
31%
■ The Bank intervenes in key economic sectors of member countries to enable them to leapfrog the stages of development and to attain
international development goals.
■ IDB Group’s total net approvals have reached $97.8 billion.
■ IDB has one of the broadest operational scopes amongst major MDBs.
■ Similarly, IDB’s existing portfolio is diversified across several regions.
Source: IDB's website, IDB's Economic Research and Policy Department;
(“CIT-7”): Azerbaijan, Kazakhstan, Kyrgyz Rep., Tajikistan, Turkmenistan, Uzbekistan and Albania
(“ASIA-8”): Afghanistan, Bangladesh, Brunei, Indonesia, Malaysia, Maldives, Pakistan and Suriname
(“MENA-Other Countries-8”) : Iran, Iraq, Jordan, Lebanon, Palestine, Syria, Turkey and Yemen
(“MENA-North Africa-5”) : Algeria, Morocco, Tunisia, Lybia and Egypt
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Areas of cooperation
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To provide Technical Assistance and Advisory Services to lay
down the legal framework for Islamic Finance in the Russian
Federation
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To advise on the possible issuance of Sukuk by the Russian
Federation
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Cooperate to establish a joint Islamic Bank to cater the needs
of both Muslims and non-Muslims customers in Russia.
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Contact us:
Mohammed Hedi Mejai
Director of Investments Department
Islamic Development Bank
P.O Box 5925 Jeddah 21432 K.S.A
Tel: +966-12-646-7422
Fax: +966-12-636-7554
Email: [email protected]
Website: http://www.isdb.org
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The Investments Department (IDBi)
“The Investments Department is responsible for undertaking and managing the IDB’s
medium and long term direct and funds investments made from the Ordinary Capital
Resources of IDB, the IDB Waqf Fund, Staff Pension Fund, Islamic Solidarity Fund for
Development”.
Equity
Investment
Division
Investments
Department
Fund
Management
Division
Resource
Mobilization
Division
 Manage & Monitor current
Portfolio
 Invest in new IFIs & companies
 Rebalance the Portfolio
 Manage & Monitor current
Funds Portfolio
 Identify & Process new Fund
investments
 Structure & Launch new
investment Funds
 Initiate Co-branded Funds with
other Institutional Investors
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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IDBi - Equity Portfolio
Over 70 investments
in 26 countries
Contributes more than
10% of IDB’s net
income
Disbursed
amount of
US$ 704
million
Market value
of US$ 1.53
billion
As of 26 April 2015
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IDBi - Funds Portfolio
More than US$ 460 million commitments in 11 Funds
Conventional Asset Classes
Listed
Equity
Sukuk
Trade
Finance
Leasing
& Ijarah
Alternative Asset Classes
Real
Estate
Infrastructure
Private
Equity
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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IDB’s Portfolio
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Infrastructure investments have the highest ratio in IDB’s portfolio with around 61.4% share. Energy
and transportation constitute around 26% and 22% of the portfolio respectively. Water, sanitation and
urban services are 13%.
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Education and health are far behind with 7.4% and 5.6% respectively.
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Cumulative energy investments are USD 30.8 billion, transportation investments are USD 9.8 billion,
Water, sanitation and urban services investments are USD 5.8 billion. Total infrastructure investments
are around USD 46 billion as of end of 2014.
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Education investments are USD 3.6 billion and health investment are USD 2.5 billion for the same
period.
Source: IsDB's website, IsDB's Economic Research and Policy Department
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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IDBi- Investment Principles & Process
■ Sharia Compliance (conventional debt maximum – 1/3 of financing structure) for Brownfield
projects
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100% Shariah compliance for Greenfield projects
Global coverage (not limited to Member Countries)
Public and Private sponsors are eligible
Greenfield or Expansion projects with development attributes
Sound reputation and solid track record of sponsors
Feasibility study done by a reputable firm
Maximum 33% stake taken by IDB
No single major shareholder stake
Deal Sourcing
& Screening
In- Depth
Analysis
Clearance &
Due Diligence
Approval &
Disbursement
Monitoring
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
Exit
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IDB Infrastructure Fund II
Target Size:
US$ 2 billion
Description:
- Successor to the US$730 million IDB Infrastructure Fund I
- The largest dedicated infrastructure fund for IDB member countries beyond core
infrastructure sectors of power, telecommunications, transportation, and includes
investment in oil and gas, refinery and petrochemicals, steel and aluminum, mining,
logistics and an allocation for healthcare, education, and financial services.
Main Investors:
IDB, 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
Expected IRR:
18% (based on the figures of Fund I)
Funds to be
Mobilized:
Up to US$24 billion
Fund Manager:
ASMA Capital Partners B.S.C.(c), established by IDB and the founding investors in
the Kingdom of Bahrain
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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Airbus Leasing Islamic Fund
Target Size:
US$ 1 billion
Description:
The first Shariah compliant Aircraft Leasing Fund
seeded by Airbus and exclusively dedicated for buying
and leasing AIRBUS planes mainly to GCC, MENA,
CIS and southeast Asian airline carriers.
Main
Investors:
IDB, Airbus Industries, Tabuung Hajji, Warba Bank,
Kuwait International Bank and Tharawat Holding
Fund Type:
Open Ended
Expected IRR: 15%
Fund
Manager:
International Air Finance Corporation
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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Marina Mall - Morocco
Expected IRR: 17%
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Marina Mall is a real estate development project where
71 Investments
IDB partnered with SMI (Societe Marita Immobiliere).
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SMI is a real estate development company established
• 34 IFIs in
2003
and
based
in
Morocco
with
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37 Companies
track
record
internationally mainly in Europe and Africa.
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Marina Mall is the largest commercial area in Rabat.
Covers 8.5 acres in Rabat-Sale’s Bab al Bahr District
which is in the heart of New Rabat.
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7.41% total
return in
1434H
It is a mixed use project
with
the last generation of real
• USD 150 million
estate complex including
premium
of Dividends
overhousing, offices and a
last 3 years
shopping mall withthe38.000
sqm on the ground floor
(parking included).
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The Mall will be managed by Poly World, a shopping mall
operator operating 65 malls globally.
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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KED Schools – Kingdom of Saudi Arabia
Expected IRR: 22%
■ KED is a world class international school
operator managing over 40 schools
internationally in Europe, UK, USA and
India.
■ KED is partnering with strong local
investors to open a chain of bi-lingual
schools in KSA that offer world class
American curriculum along with Arabic
curriculum.
■ Education
is
a
sector
of
core
significance to IDB.
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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MOUs Signed
■ Public Pension Agency (KSA),
Ministry of Finance (Bahrain) and
Ministry of Finance (Brunei)
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Sovereign Investment Authority (Nigeria)
Caisse de Depot et de Gestion (Morocco)
Sovereign Wealth Fund (Gabon)
Pertamina (Indonesia)
Strictly private & confidential. Not to be disclosed without prior written consent of Islamic Development Bank
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