The Role of Investors

Information Relevant to Potential APIF Impact Investors

Generally, APIF provides a secure avenue for investing with a social impact. Indeed, its relatively low dividend (averaging 3.5 percent of the invested amount annually since inception, with a minimum distributed dividend of 2.5 percent) is offset by its social dividend, its low-risk nature, in addition to appreciation in the value of its shares.

APIF is established as a U.S.-Dollar denominated fund managed by the Islamic Development Bank in accordance with the Islamic concept of Mudarabah and the regulations of APIF.

The IsDB undertakes the role of Mudarib acting as Manager and Custodian of APIF. As such, APIF benefits from the high-quality support functions provided by IsDB (e.g. procurement, legal, risk management, KYC, and financial control), the management expertise of a AAA-rated institution, as well as the general Islamic-finance-based development ecosystem provided by IsDB.

The Mudarib (Fund Manager), IsDB, applies very prudent measures for extending financing out of APIF’s resources. These measures include, among others, thorough project due diligence, the requirement of Government guarantees, first class bank guarantees, mortgage or insurance cover from renowned credit insurance companies.

Subscription to APIF’s capital is open to Awqaf ministries, directorates, and institutions in addition to Islamic banks and financial institutions as well as philanthropic/donor institutions and individual investors. Given the diversity of potential participants, various options for investing and donating are available.

The following information is useful for potential investors:

1	Nature & Legal Form	APIF is established as a U.S. Dollar denominated fund managed by the Islamic Development Bank in accordance with the Islamic concept of Mudarabah and the Regulations of APIF. The IsDB undertakes the role of Mudarib acting as Manager and Custodian of APIF. As such, APIF benefits from the high-quality support functions provided by IsDB (e.g. procurement, legal and KYC, and financial control) as well as the general Islamic-finance-based development ecosystem provided by IsDB. The Islamic Development Bank (IsDB), the Mudarib (fund Manager) is a multilateral development financing institution headquartered in Jeddah, Saudi Arabia. It was founded in 1973 as a specialized institution of the Organization of Islamic Cooperation (OIC). It has 57 shareholding Member Countries.
2	Shareholders (Participants)	Subscription to APIF’s capital is open to Awqaf ministries, directorates, and institutions in addition to Islamic banks and financial institutions as well as individual investors.
3	Organization Structure	APIF has a Participants Committee, which oversees implementation of the Regulations and the Guidelines for Investment of APIFs financial resources, in addition to looking into the Annual Report and Final Accounts of APIF after their approval by IsDB’s Board of Executive Directors. APIF has a Supervisory Committee (a subcommittee of IsDB’s Board of Executive Directors) which is responsible for examining the quarterly accounts of APIF and for proposing polices and guidelines to the BED. It is also responsible for the periodic review of APIFs performance and submission of related reports to the Participants Committee and IsDB’s Board of Executive Directors. As per APIF regulations, representation on APIF committees is as follows: All the shareholders investing more than US$1 million (the minimum investment amount) may attend the Participants Committee Meeting of APIF; The shareholders investing between US$ 5 million (the minimum investment amount) and US$ 10 million have one representative in the Supervisory Committee; and The shareholders investing more than US$ 10 million have two representatives in the Supervisory Committee.
4	Capital Structure and Resources	The authorized capital of APIF is US$100 million divided into 10,000 "A" Certificates with a par value of US$10,000 each. The Mudarib may mobilize additional resources for APIF for investing in specific projects, through syndication, co-financing, or issuing of "B" Certificates that can take the form of Muqarada Certificates, Ijara (Leasing) certificates, etc. The Participants may purchase "B" certificates. To augment the resources of APIF, the IsDB has extended a US$100 million line of financing for APIF to be utilized for the financing of APIF’s projects.
5	Profitability	Notwithstanding the noble cause for which APIF was established, its operations are market oriented to secure a reasonable return for its investors. The overriding consideration, however, is to ensure continuity of APIF by aiming at building a strong General Reserve to the tune of 50 percent of paid-up capital before ensuring high dividend payout ratios to investors.
6	Profit Distribution	Up to 20 percent of any year’s net income can be transferred by the Mudarib to the General Reserve. The total scheme of profit appropriations is, therefore, as follows: Particulars Percent of Total Mudarib (Management) Fees 10% General Reserve 0% - 20% Distributable Dividends 70% - 90% Total 100%
7	Exit Mechanism	The IsDB undertakes, from the fourth financial year of APIF, to purchase from holders of "A" Certificates not more than 50 percent of the certificates held by each of them provided that such purchase shall not result in the holder being a holder of certificates the aggregate par value of which is less than one million U.S. Dollars.
8	Security	The Mudarib (the IsDB) applies very prudent measures for extending financing out of APIFs resources. These measures include, among others, the requirement of Government guarantees, first class bank guarantees, mortgage or insurance cover of renowned credit insurance companies. To guard against concentration of risk, APIF strives to diversify its financing portfolio by setting ceilings for countries and beneficiaries within one country.
9	External Auditors	APIF is audited by an internationally reputed audit firm that provides a review and audit of APIF's financial statements.