Airbus, Jeddah's IDB to invest $100m in plane-leasing fund

Dubai-based investment firm helps establish sharia-compliant fund amid growing demand from MidEast airlines
(AFP/Getty Images)
By Andy Sambidge
Fri 27 Jun 2014 12:55 AM

Airbus will invest $100 million in a Shariah-compliant plane-leasing fund amid growing demand from airlines in the Middle East.

Airbus and Jeddah-based Islamic Development Bank will each provide 10 percent of an initial $1 billion in equity, according to Dubai-based Quantum Investment Bank Ltd, which is helping to establish the fund with Palma Capital Ltd.

The fund, which has a targeted size of $5 billion from a combination of equity and debt, will be managed by the International Airfinance Corporation (IAFC) with Airbus and the Islamic Development Bank (IDB) as anchor investors and strategic partners, a statement said.

The fund will operate according to Shari’ah principles and will purchase brand new and second hand Airbus aircraft to be leased to airline companies in the Gulf Cooperation Council (GCC) and Organization of Islamic Conference (OIC) member countries.

“Airbus has been very successful in growing its market share in the MENA region over the last two decades and this innovative financing initiative will enable us to satisfy our customers’ financing needs even more effectively,” said Habib Fekih, president of Airbus Group for MENA & Africa who is also the chairman of the board of ALIF Fund.

Dr Idriss Ghodbane, CEO of Quantum Investment bank, said: “We are extremely pleased to partner with Airbus and IDB in this transaction as we believe this is a pioneering Islamic investment initiative that will contribute to the development of Islamic capital markets."

Moulay Omar Alaoui, chairman of Palma Capital who is also the president and CEO of IAFC, added: “The establishment of ALIF Fund was derived from the strong interest of both investors and financiers for Shari’ah compliant instruments that generate attractive and stable returns stemming from the ownership of commercial aircraft assets over an extended period of time.

"This is further reinforced by the inherently significant, growing need and demand for aircraft by airliners in the GCC and OIC member states."

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