MICROCAPITAL BRIEF: Islamic Development Bank’s ICD, Dragon Capital to Develop Sharia-compliant Investment “Silk-way Growth Fund” for SMEs in Kazakhstan

The Islamic Corporation for the Development of the Private Sector (ICD), a development finance institution of the Saudi Arabia-based Islamic Development Bank (IDB), and Dragon Capital Partners, the venture capital and private equity arm of Ukraine-based Dragon Capital Group, recently announced the intention to develop the Silk-way Growth Fund, a Sharia-compliant investment fund benefitting “high growth” small and medium-sized enterprises (SMEs) involved in manufacturing in Kazakhstan. The fund is slated to address the “financing gap created due to difficulty of accessing capital at sustainable market rates and the banking sub-sector’s lack of confidence in SME entrepreneurs.” According to ICD, SMEs make up 96 percent of all businesses in Kazakhstan and 25 percent of the country’s GDP.

ICD will act as fund advisor to Silk-way as part of its SME Platform, an initiative aimed at “build[ing] Sharia-compliant investment management capacities” in ICD’s 52 member countries, and it will “consider investing” capital in the fund as plans for the fund are finalized.

As of 2015, ICD reports total assets of USD 1.7 billion, return on assets of 1.27 percent and return on equity of 2.07 percent. Financial information on Dragon Capital is unavailable.

By Michelle Dold, Research Associate

About The Islamic Corporation for the Development of the Private Sector (ICD)

The Islamic Corporation for the Development of the Private Sector (ICD) is a development finance institution that is part of the Saudi Arabia-based Islamic Development Bank (IsDB). The corporation was founded in November 1999 to support the economic development of its 52 member countries by providing finance for private-sector projects, promoting competition and entrepreneurship, providing advisory services to governments and private companies, and encouraging cross-border investments. As of 2015, ICD reports total assets of USD 1.7 billion, return on assets of 1.27 percent and return on equity of 2.07 percent.

About Dragon Capital Group

Dragon Capital Group (DCG) is a financial services firm based in Kyiv, Ukraine, that offers services in “equities and fixed income sales, trading and research, investment banking, private equity and asset management” to individual and institutional clients. In 2016, DCG created Dragon Capital Partners as its venture capital and private equity arm, investing in companies in the Commonwealth of Independent States (CIS). Financial information on DCG is not available.

Sources and Additional Information:

[1] ICD: “Islamic Corporation for the Development of the Private Sector (ICD) and Dragon Capital Partners (DCP) initiate the development of a Shariah compliant investment fund dedicated to supporting SMEs and mid-tier companies in Kazakhstan”

[2] MicroCapital Universe Profile: The Islamic Corporation for the Development of the Private Sector (ICD)

[3] MicroCapital Universe Profile: Dragon Capital Partners

[4] MicroCapital Universe Profile: Islamic Development Bank (IsDB)

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