Jeddah-based Islamic Development Bank (IDB) is expecting to close the first subscription tranche of its $1,500 million infrastructure fund early next year. Dar Al-Maal Al-Islami Trust is the fund's lead sponsor, Washington-based Emerging Markets Partnership (EMP) is the principal adviser, and Bahrain-based Islamic Investment Company is acting as adviser.

Mumtaz Khan, managing director of EMP, told MEED in a late November interview that the fund has already received $150 million and $100 million in equity commitments from IDB and Dar al-Maal, respectively. The first closing will take effect when equity reaches $500 million which will eventually be raised to$1,000 million. There will also be a complementary finance facility of $500 million.

'We are targeting major government institutions, leading private sector corporations and individuals to raise the equity,' Khan said. 'At a later stage, we will approach major international institutions with a strategic interest in the region. Companies created by the fund will be listed on regional and international stock markets.'

The fund has a life of 10 years. It will invest only in IDB member states. It is aiming at an annual rate of return of 7 per cent for investors and drawdowns will be linked with the implementation schedule of individual projects and will be spread over several years.

Minimum investment is $10 million while there is no upper limit. There is an annual management fee of 1.5 per cent and the fund will pay a 20 per cent performance fee to EMP after investors receive their equity capital and the7 per cent priority return.