Turkey's sovereign wealth fund 'signs' Islamic mortgage deal with IDB

Turkey's new sovereign wealth fund has signed a framework agreement with an Islamic Development Bank (IDB) unit to develop Islamic mortgages as well as different types of cooperation, the fund's head has stated, Reuters and Anadolu Agency reported on May 3. 

Turkey's government has already transferred stakes worth billions of dollars in Turkish Airlines, major banks and other companies to the controversial new fund, which was set up last year partly to help finance big-ticket infrastructure projects.

"The Turkish Wealth Fund [TVF] has signed a framework agreement with the Islamic Development Bank. In the framework of the agreement, it is planned to offer interest free [Islamic] mortgages with long-term installment plans to potential property buyers by establishing an Islamic mortgage company. Some derivative instruments will also come online," TVF chairman Mehmet Bostan told reporters late on May 2.

Bostan noted that the parties aim to complete the establishment process of the related structure in the next three months.

"We want to make it online in the next one-year period," he added. 

Bostan noted that the European Bank for Reconstruction and Development (EBRD) has also voiced interest in cooperating with the Turkish fund.

$40 billion in market value

Responding to a question about how much the fund's market value is worth, Bostan said its market value is more than $40 billion and it has over $200 billion in assets.

"After our valuation assessment, we have seen that the fund's market value is around $40 billion and it has around $200 billion in assets. The market value is higher than our preliminary estimates," he added. 

Bostan said the TVF had the authority to support...