Addition debts:
By tapping a debt fund, businesses will not have to shed any of their shareholding. That gives them the additional flexibility. Image Credit: Gulf News Archive

Dubai: This is a good time to be thinking ‘debt’ – the Dubai fund manager Shuaa Capital sure is. Shuaa has launched a $250 million Sharia fund that will focus on ‘venture-debt instruments’. The fund will be listed at Abu Dhabi's ADGM, and is supposed to the biggest such in the Gulf.

It will provide access to capital for “high growth companies across the GCC”. An area of focus will be ventures in the region’s technology space that are “seeking alternative sources of funding without significantly diluting their shareholding”.

The Gulf financial markets recorded a 112 per cent rise in venture capital linked deals through the recent past, with investments of $1.7 billion across 281 transactions. The majority of these were for early-stage investments such as ‘angel’, ‘seed’ and Series A rounds. Venture debt regionally increased 4.2 times from 2020, with $257 million deployed into 14 investments, “indicating a clear demand for alternative funding sources”.

“We aim to support the growth of businesses, create jobs, lead further developments in innovation and technology, support economic diversification and guide founders towards realizing 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 has $545 million deployed in private debt transactions and $3 billion structured across multiple sectors in the last 11 years. Recently, there was the $50 million investment in Pure Harvest and a 'PIPE funding' for Anghami, which became the first Arab tech company to list on Nasdaq in New York last month.

  1. Investments in 'growth companies' across the GCC have been dominated by early-stage transactions and investors. Few have been able to support businesses throughout their growth cycle.
  2. As a result, several growth-stage companies have limited access to larger pools of capital and non-equity financial solutions. This gap needs to be filled for new ventures to succeed, according to Shuaa Capital.