Shuaa Capital launches $250m venture debt fund

Dubai investment bank has invested $545m in private debt transactions and $3bn structured across multiple sectors over the last 11 years, including technology

Shuaa-backed Anghami, a digital music entertainment technology platform, listed on the Nasdaq last month. Chris Whiteoak / The National

Dubai-based investment bank Shuaa Capital has launched a $250 million fund, the GCC's largest venture debt fund, which will support the growth of regional technology companies that are seeking alternative sources of capital.

“We aim to support the growth of businesses, create jobs, lead further developments in innovation and technology, support economic diversification and guide founders towards realising their vision," said Natasha Hannoun, head of debt at Shuaa Capital.

"Our investors have the opportunity to diversify into a new asset class in technology, with a shorter investment horizon, frequent distributions and attractive financial returns”

Shuaa, which has assets worth nearly $14 billion under management, said the fund seeks to capitalise on the need for funding from sources that can help businesses evolve throughout their growth cycle.

Investments in growth companies throughout the GCC have been dominated by early-stage transactions and investors that have not been able to support businesses, it said.

"Several growth-stage companies have limited access to larger pools of capital and non-equity financial solutions; a gap which needs to be filled for new ventures to succeed," the company said.

VC funding to Middle East and North Africa start-ups surged to $2.6bn in 2021 from more than $1bn in 2020, start-up data platform Magnitt reported. The region’s most active markets ― the UAE, Saudi Arabia and Egypt ― each had a mega deal, worth more than $100m.

The GCC has registered a 112 per cent annual increase in venture capital transactions, with total investments of more than $1.7bn across 281 deals, the majority of which have been early-stage investments; angel, seed, and Series A, according to Shuaa data.

Venture debt regionally has increased 4.2 times from 2020, with a total of $257m deployed into 14 investments, which points to rising demand for alternative funding sources.

Shuaa has invested $545m in private debt transactions and $3bn structured across multiple sectors over the last 11 years including technology. The company recently invested $50m in Pure Harvest and the PIPE funding for Anghami, which became the first Arab tech company to list on Nasdaq in New York, last month.

Dubai-based Wamda Capital, a venture capital entity founded by Fadi Ghandour, launched a $70m investment fund in 2015, which counts the World Bank's International Finance Corporation, Kuwaiti telco, the Zain Group, family offices and other partners, as investors. It invests in various start-ups and is focused on technology-enabled companies.

Earlier this month, Shuaa launched a $100m initial public offering of the first of its three planned special purpose acquisition companies on Nasdaq New York. Last July, Shuaa said it plans to set up three Spacs with capital of $200m each to tap into the opportunities in the sector.

The listing of Shuaa's Spac will target regional businesses that are "reaching high-growth stage and seeking to access highly liquid and affordable capital markets to fund their growth and geographic expansion", the company said.

A Spac is a vehicle with no commercial operations and is formed with the intention of raising funds through an IPO and then acquiring an existing company. Spacs have lighter disclosure requirements than IPOs and have been increasingly used over the past two years to take fast-growing companies public quickly.

Updated: March 23, 2022, 5:10 AM