Saudi Arabia issued licences to six start-up entities that have collectively pledged to invest up to $162.2 million.
Four start-ups, including re-commerce platform Cartlow, second-hand marketplace Soum, delivery company Rabbitmart and dental service Smileneo received licences from Saudi Arabia’s Ministry of Investment.
Licences were also granted to imVentures, a Riyadh-based venture capital fund, and Silicon Valley-based early stage accelerator Plug and Play.
INVESTMENT PLEDGES
Cartlow: $13.4m
Rabbitmart: $14m
Smileneo: $5.8m
Soum: $4m
imVentures: $100m
Plug and Play: $25m
The announcement was made during the Global Entrepreneurship Congress in Riyadh on Monday.
The Ministry of Investment of Saudi Arabia, the event's organiser, also announced the signing of preliminary agreements with Monshaat — the kingdom's Small and Medium Enterprises General Authority — and the Saudi Authority for Data and Artificial Intelligence (Sdaia) to further extend support to start-ups.
“As the world continues to emerge from the Covid-19 pandemic, entrepreneurs are shaping our new normal. In Saudi Arabia, the start-up scene is thriving and there is enormous potential for venture capitalists,” said Minister of Investment Khalid Al Falih.
The Arab world's biggest economy is in the midst of a major diversification programme that aims to steer its economy away from oil dependence. One key pillar is technology, with Riyadh encouraging start-up entrepreneurship and attracting investments from both local and foreign funds.
The kingdom is among the most active start-up markets in the Middle East and North Africa, along with the UAE and Egypt.
Venture capital funding to Mena start-ups rose to $2.6 billion in 2021, which was 138 per cent higher compared to 2020, data platform Magnitt reported.
Each country closed a deal worth more than $100m.
Overall, the Mena region welcomed record-breaking venture capital numbers last year: registered transactions recovered from a slight dip in 2020 to reach a high of 590 deals, 35 exits were announced and the region recorded the highest number of investors to finance ventures based across Mena, Magnitt said.
There are 1,349 start-ups in the kingdom, Magnitt's website showed.
These new investments are a result of the economic transformation happening now under Vision 2030
Khalid Al Falih,
Saudi Minister of Investment
Earlier this month, Arib, a digital loan broker based in Jeddah, closed a $2.3m seed investment round that it will use for product and market expansion, while Dammam-based coffee speciality platform Kaffeen was acquired by UAE-based Cofe App for an undisclosed sum in a move to consolidate its presence across the region.
“An enhanced regulatory environment and our recently launched National Investment Strategy are unleashing opportunities not previously available in the kingdom and these new investments are a result of the economic transformation happening now under Vision 2030,” said Mr Al Falih, who is also the kingdom's former energy minister, referring to Saudi Arabia's diversification agenda.
The ministry's agreements with Monshaat and Sdaia follow last week's deal with the Riyadh-based Jada Fund of Funds — an entity established by the kingdom's Public Investment Fund — to create a platform that will connect Saudi entrepreneurs with investors abroad.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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ESSENTIALS
The flights
Etihad (etihad.com) flies from Abu Dhabi to Mykonos, with a flight change to its partner airline Olympic Air in Athens. Return flights cost from Dh4,105 per person, including taxes.
Where to stay
The modern-art-filled Ambassador hotel (myconianambassador.gr) is 15 minutes outside Mykonos Town on a hillside 500 metres from the Platis Gialos Beach, with a bus into town every 30 minutes (a taxi costs €15 [Dh66]). The Nammos and Scorpios beach clubs are a 10- to 20-minute walk (or water-taxi ride) away. All 70 rooms have a large balcony, many with a Jacuzzi, and of the 15 suites, five have a plunge pool. There’s also a private eight-bedroom villa. Double rooms cost from €240 (Dh1,063) including breakfast, out of season, and from €595 (Dh2,636) in July/August.
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Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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Director: Laxman Utekar
Producer: Maddock Films, Jio Cinema
Cast: Kartik Aaryan, Kriti Sanon, Pankaj Tripathi, Vinay Pathak, Aparshakti Khurana
Rating: 3/5
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INVESTMENT PLEDGES
Cartlow: $13.4m
Rabbitmart: $14m
Smileneo: $5.8m
Soum: $4m
imVentures: $100m
Plug and Play: $25m
