SAUDI ARABIA. The launch of a US$600 million Food & Agribusiness Fund was announced today by Mr Farid Masood, Director of Asset Management Division of the Islamic Corporation for the Development of the Private Sector (ICD).
The fund is a strategic partnership between ICD and a qualified management team, advised by Robeco - a subsidiary of Dutch Rabobank.
With an objective to promote strategic investment flows and expertise into the food and agricultural sector in Islamic countries, the ICD Fund will address growing food security concerns by capitalizing on the region’s largely under-exploited potential for increased food production and supply.
Investing in a wide range of strategic and commercially sustainable initiatives across the entire food & agriculture value chain, ICD’s launch of the fund comes at an opportune time. Recent unprecedented food shortages and price increases have forced food security to the forefront of matters meriting international concern.
The issue is more pronounced for various Islamic countries characterized by arid climates and/or underdeveloped food and agricultural sector. Under ICD’s sponsorship, the fund is set to raise US$600 million from governmental, multilateral and institutional investors in Islamic countries and beyond.
The fund’s concept and capabilities are widely recognized and the fund is receiving strong interest from several target investors already. The ICD Food & Agribusiness Fund will make private equity investments in partnership with the private sector, generating a multiplier effect on the fund’s capital and will be operational once it has raised US$350 million, anticipated by year-end.
Mr Khalid Al-Aboodi, the Chief Executive of ICD, commented, “The fund is the first public private partnership of this nature and size to address the inefficiencies and wastage facing the food and agricultural sector throughout our member countries. Boosting regional food production, supply and trade, the fund’s investments will also lead to creation of jobs, transfer of technology, promotion of sustainable practices and poverty alleviation. The fund will significantly benefit from ICD’s standing and resources in the Islamic countries”.
Robeco’s commitment to sustainable investing in a range of sectors such as water, energy, climate and agriculture, is part of the company’s philosophy. At an international conference on “Responsible Investing in Food & Agribusiness” in Noordwijk, Graham Elliot, CEO Middle East for Robeco said, “we are delighted to be appointed advisor to the ICD Food & Agribusiness Fund, and through Robeco’s experience, network and Rabobank’s research and global footprint, support the sustainable development of the food and agricultural sector in the Islamic world. We see great investment opportunities in this area going forward”.
The fund will be managed by a specialized asset management company that will house a team of seasoned professionals, including secondments from ICD and Robeco, who bring together extensive investment experience and track record in the Islamic countries and international food and agricultural sector. Dr Abdullah El-Kuwaiz, a renowned economist and former statesman, will act as Chairman of the fund manager.
Dr El-Kuwaiz commented: “The fund will promote value-accretive investments in inputs, technology, infrastructure, farming, logistics and trade whilst generating attractive returns for its investors. The fund will be a catalyst for attracting foreign investment and private sector expertise to capitalize on the Islamic countries’ untapped potential for producing more food for domestic markets, as well as exports, thereby promoting food security and economic growth on a regional basis”.
The IDB Group is a premier multilateral development finance institution with a mandate to foster economic and social development in its 56 member countries and Muslim communities in non-member countries. ICD is the private sector arm of the IDB Group mandated to develop and promote private sector as a vehicle for social and economic growth.
The initiative is a strong strategic cooperation, complementary to various individual efforts undertaken by the IDB, ICD, Rabobank and Robeco, for the development of food security and agriculture in various target geographies. The Fund will be a private equity fund structured as a limited partnership in a suitable jurisdiction.
The Fund will attract both strategic and commercial investors including various governmental, semi governmental, multilateral and institutional investors in the Islamic countries and beyond. The Fund will have a term of 10 years with a commitment period of 5 years.
The Fund will make equity and quasi equity investments in a range of strategic and commercially attractive food and agri projects and companies across the full value chain that benefit from the comparative advantages offered by the Fund’s various target countries. The Fund will target investments in various stages of the life cycle including greenfield and brownfield projects, growth companies, privatization and restructuring, etc.
The Fund will be managed by a specialized asset management company to be established as a joint venture between ICD and the management team. Under advise from Robeco, the Fund’s management company will benefit from Robeco’s asset management expertise and Rabobank’s extensive knowledge, resources and network in the international food and agri sector.
Dr. Abdullah El-Kuwaiz, a renowned economist and former banker and statesman, will be the Chairman of the Board of Directors of the Fund management company.
The Islamic Corporation for the Development of the Private Sector (ICD) is a multilateral organization affiliated with the Islamic Development Bank (IDB) Group. It is authorized capital stands at $2.0 billion, of which $1.0 billion is available for subscription. The current subscribed and paid-in capital is $875 million and $568 million respectively. Its shareholders consist of the IDB, 51 member countries, and five public financial institutions. Headquarters in Jeddah, ICD was established by the IDB Board of Governors during its 24th annual meeting held in Jeddah in Rajab 1420H (November 1999).
The mandate of ICD is to support the economic development of its member countries through provision of finance to private sector projects in accordance with the principles of the Shari’a law. ICD finances projects that are specifically geared to creating employment opportunities and boosting exports. Furthermore, ICD mobilizes additional resources for projects and encourages the development of Islamic financing and capital markets. It also attracts co-financiers for its projects and provides advice to governments and private sector groups on policies aimed at encouraging the establishment, expansion and modernization of private enterprises, development of capital markets, best management practices and enhancing the role of market economy. ICD also provides advisory, asset management and investment banking services further facilitating direct investments into financially attractive sectors that also have a developmental impact in its member countries.
ICD enjoys the premier multilateral status in its member countries and has extensive resources and relationships in these countries and internationally.
To date, ICD has, through its own balance sheet and managed funds, extended financing and investment commitments of over US$2 billion to 205 projects.
About Robeco Group, the Advisor
Robeco offers investment products and services to institutional and private investors worldwide. It has EUR 177 billion in assets under management at 31 March 2012 of which half are institutional assets. Robeco delivered a net profit of €134 million for the full year 2011. Globally, Robeco employs approximately 1600 people and has offices in 15 countries. Its head office is located in Rotterdam, The Netherlands.
Robeco advocates responsible investing. Environmental, social and governance factors are integrated into the investment processes, and there is an exclusion policy in place. Robeco makes active use of its voting right and enters into dialogue with the companies in which it invests.
The product range encompasses equity and fixed-income investments, money-market funds, responsible investing and alternative investments, including private equity, hedge funds and structured products. Next to the global Robeco brand, the following brands are part of the Robeco Group: Corestone, Harbor Capital Advisors, Transtrend, SAM Group and two joint ventures; Canara Robeco Asset Management and Robeco Teda.
Robeco is part of Rabobank Group. For more information: www.robeco.com
The Management Team is a well-qualified and multinational group of professionals with extensive prior experience and a successful track record of investment and financing in Islamic countries. The team is led by Adeeb Ahmad who was one of the earliest entrants in the regional private equity industry. Adeeb has over 24 years of experience in private equity, fund management, investment banking, Islamic finance and capital markets covering various Islamic countries, with last 12 years dedicated to private equity fund establishment and management in the region.
Some of the more senior members played primary roles in the management and the investment and exit programs of the IDB Infrastructure Fund I (“IDB Fund I”), and later, of Manara Infrastructure Fund (“MIF”) – both of which focused on infrastructure investments in Islamic countries. Other members have had extensive experience in investment banking, Islamic finance, investment advisory and commercial banking covering a number of the same target economies.