Social Islami Bank is set to invest $2 million in a real estate-focused private equity fund managed by the Islamic Development Bank.
Called the Awqaf Properties Investment Fund (APIF), the fund's objective is to develop and invest in accordance with principles of Islamic shariah in Awqaf real estate property that is socially, economically and financially viable in member countries of IDB and Islamic communities in non-member countries.
Awqaf real estate property is dedicated to charitable or Muslim religious purposes with no intention of the donor reclaiming the assets. Once donated, the property cannot be sold or transferred from one party to another.
SIBL will buy 2 percent stakes of the fund, enough to give the local bank a seat at the table of the APIF board, according to a report of the Bangladesh Bank.
The local bank will buy 200 shares of APIF for $10,000 each.
“We are investing in the project not for commercial reasons but for social welfare,” said AMM Farhad, additional managing director of SIBL.
In Bangladesh, APIF will start off with the construction of two towers and a multipurpose building for Anjuman Mufidul Islam in Dhaka and a university in Chittagong, with a total investment of $100 million.
SIBL will be the manager of the investments as the participant bank of APIF, according to Farhad.
The bank will represent Bangladesh in the managerial committee of APIF, thus opening up new avenues of investment by APIF in the country, he said. At present, nine member countries of IDB have representatives in the APIF board: Saudi Arabia, Kuwait, Egypt, Iran, Bahrain, Jordan, Palestine and Malaysia.
The central bank allowed SIBL to invest in the welfare fund considering its financial capability, said a senior official of the BB. “Moreover, this is the first bank to represent Bangladesh in any international body -- this will enhance the country's image.”
SIBL shares gained 40 percent in the last one and a half months. On Thursday last week, the bank's shares closed at Tk 33.20.