Islamic Development Bank discusses new investment firm

Baku: The Jeddah-based Islamic Development Bank (IDB) is discussing with Azerbaijan the formation of a company that will make investments in accordance with Islamic principles, officials said.

"They have asked for our help. We are going to send a mission to study [the plan]," IDB president Dr Ahmad Mohammad Ali said.

It will be a state-owned company to be established through a presidential decree, said Mikayil Jabbarov, Azerbaijan's deputy minister for economic development.

The company will facilitate private investment in various projects in the country. The IDB is looking at setting up similar companies for other Central Asian countries.

"A feasibility study is being prepared to set up a Sharia-compliant corporation, once it is finished it will be presented to the IDB.

Initially, we have agreed that both the IDB and the Azerbaijan government will contribute capital to show financial and political commitment," Jabbarov said, adding a strategic investor "with experience in running a similar type of institution" will join the plan.

Total fund commitments are expected to be between $45 million and $60 million. About half of the funds will be used for musharka allocations, while the rest will be used for modaraba and ijara financing.