Ishraq Endowment Investment Fund

Oman’s Ishraq Endowment Investment Fund is the IFN Social Impact Deal of the Year 2024 Award winner as it “provides individuals, companies and endowment establishments with opportunities to contribute to charitable fields and community projects consistent with Islamic values”.  

Its subscription options cater for target three distinct investor classes – permanent endowments, temporary endowments and investment-focused subscriptions – explained the fund’s advocate Thamer Al Shahry, partner at Saeed Al Shahri & Partners Law Firm & Legal Consultants. 

By introducing such innovative and diverse categories for unit subscription, this fund initiative sets a new precedent by providing investors with enhanced flexibility and customized options to align with their unique financial objectives.  

The fund’s establishment required significant legal effort in navigating complex regulatory frameworks. The process involved obtaining exemptions from the Financial Services Authority and required innovative approaches to balance subscriber flexibility with strict adherence to Shariah principles, Omani endowment regulations and Omani securities and capital market regulations.  

The Omani Ministry of Endowments and Religious Affairs and the Sultan Qaboos Higher Centre for Culture and Science and Bank Nizwa, in cooperation with Oman National Investments Development Company (Tanmia), launched the OMR10 million (US$25.97 million) fund on the 4^th November 2024. 

Initial subscriptions opened on the 12^th December 2024 through to the 30^th January 2025, with a minimum of 5,000 units for institutional applicants and 500 units for individuals, including foreign nationals. Subsequent subscriptions are in multiples of 100 units, with no maximum set. The fund is required to have at least 1.5 million units issued to remain operational. 

With permanent endower subscribers, “returns from these endowments are allocated to specific causes,” Thamer shared with IFN Investor.  

“All allocations are supervised by Oman’s Ministry of Endowments and Religious Affairs to ensure proper management and adherence to Endowment Law and Islamic Shariah principles.” 

Temporary endowment subscribers can choose periods of one, three or five years – renewable for similar periods and in accordance with the controls specified in Oman’s Endowments Law. The subscriber may specify disbursements to mosques, the needy, orphans or general charitable causes. 

“This model provides a practical approach for contributors who wish to support a cause for a defined period while retaining the flexibility to redirect their resources after the lapse of the defined endowment period,” Thamer explained. 

The third subscriber category would be the typical investor seeking financial returns from a share of the fund’s investments, without endowing any units. 

It is not possible to switch categories once subscribed. Unitholders are locked in for at least a year and would need to redeem the investments – before using the cash to subscribe to a different category. 

Temporary endowments subscribers can redeem units only after their chosen periods are completed, before switching to another category. Permanent endowments cannot be redeemed. However, unitholders may transfer, assign or mortgage their units. 

Fund manager Tanmia can invest at least 80% of assets in listed securities, special purpose companies and Islamic fixed income instruments issued in GCC countries – including short-term investments to ensure availability of liquidity.  

Up to 20% can be held in shares of unlisted companies in the GCC countries or placed in special purpose companies or investment funds that opens the fund’s access to other Shariah compliant opportunities that are not easily available. 

No more than 60% of its assets can be invested in any one country and a 50% cap applied for holdings in any single economic sector. The fund aims to achieve long-term growth in its capital base, with regular investment income returns for Waqf purposes. 

Distribution for this open-ended public endowment and investment fund, listed on the Muscat Stock Exchange, is conducted annually. There is no tax on receipt of the fund’s unit profits in Oman, nor on the proceeds of redeeming units – but the fund is taxed on revenues in jurisdictions outside Oman. 

*Disclaimer:  The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.