IDB Unit Investment Fund (UIF)


UIF was launched in 1410H (1989) in order to promote foreign direct investment in IDB member countries. The Fund has carved for itself a market niche of investments and Shariah compliant products both in short and long term tenors. Thus, the Fund is diversified by sector, by geography and by time span to maturity. This diversification policy serves as a natural mechanism for risk mitigation.

 
Objectives

UIF pursues two main objectives: mobilisation of resources for IDB and earning adequate return on investment for its unit holders. In its efforts to mobilise resources, the Fund aims at assisting IDB to source additional funds through the securitisation of its lease and instalment sale assets. In addition, the Fund complements IDB by financing projects and Murabaha operations either directly or jointly with the Bank or its affiliates. On the other hand, the Fund aims at providing unit holders with an opportunity to invest in accordance with the principles of Shariah. The Fund also provides attractive return on investment with minimum level of risk. The Fund has consistently achieved these objectives and has been able to distribute dividends to its unit holders at rates that have exceeded the rates of comparable investments available in the market.

 
Structure

In sixteen years, the size of the Fund has grown from $100 million to $325 million. The Fund is held by 20 investors from 11 countries. The Fund is listed on the Bahrain Stock Exchange. The listing has enhanced the liquidity position of the Fund making it possible to trade the Fund?s units at any time without the need of applying to the IDB for repurchase. The currency used by UIF for financing is the US dollar. The UIF extends its financing facilities through various Islamic modes of financing. Depending on the mode, the tenor of financing varies from 5 to 10 years for medium and long term financing respectively, and 6 to 24 months for short term financing.