The Saudi SME Fund

 The Saudi SME Fund recognizes the vital role of SMEs in the Saudi economy, as this also pivoted in the 2030 vision recently adopted by the Kingdom. The Saudi SME Fund also understand the challenges faced by SME’s in accessing finance for rapid growth. The Saudi SME Fund provides a Sharia’a-compliant partnership financing program for successful small and medium enterprises in operation for at least two years in value added sectors, to help them realize their true potential.

Backed by established and reputable institutions, the Saudi SME Fund is committed to growing the SME sector to influence further contribution to the economic growth of the kingdom. This is evident in the Saudi SME fund’s strategy of investing in businesses that add value to the economy and are catalysts for job creation in sectors such as consumer goods and services, healthcare, education, media, retail and transportation. By taking a leadership position in increasing employment opportunities for Saudi nationals, the Saudi SME Fund plays a key role in developing a more involved, qualified and independent workforce.

Furthermore, the Saudi SME Fund is also committed to furthering the development of female entrepreneurship within the kingdom and encourages the ever expanding role of women through investments in enterprises that advocate gender empowerment.

The Saudi SME Fund aims to expand businesses with an innovative and flexible financing approach; thus, allowing them to maintain control and enjoy all the benefits of financing, without applying a burden on the operating cash flows of the business.

The Saudi SME Fund Investment approach

·        We invest in SMEs with a good credit history and an established bank relationship (deposit and transaction)

·        We provide funding through equity investment and shareholder loans

·        We arrange for the repayment of the shareholder loan in affordable principal-plus-profit monthly installments

·        Upon maturity of the shareholder financing , we allow the SME owner to buy back the Saudi SME fund’s equity investment through a pre-agreed Sharia’a-compliant mechanism

·        We grant investment and financing for up to 5 years, with the maximum financing amount being SAR 20 million

The Saudi SME Fund basic selection criteria for companies are as follows:

·        Positive cash flow

·        Operating in a value added sector such as: education, consumer goods and services, media, healthcare, transportation and other similar sectors

·        Have clear potential for job creation through growth 

·        Must be an established corporate entity (LLC or a JSC) with at least 2 years of audited accounts from a reputable accounting firm. (The Saudi SME fund will provide guidance to establishments and sole proprietorships on converting into an established corporate entity, if required)

Malaz Real Estate Opportunities Fund I

During April 2014, Malaz Capital purchased an established residential compound in Dhahran, Saudi Arabia with over 900 units through the Malaz Real Estate Opportunities Fund I, a CMA regulated real estate closed ended private equity fund. The Compound value is in excess of SAR2 bn and is fully leased through a long term lease agreement. The Fund’s size is SAR745.0 mn, its term is expected to be 10-12 years during which it is projected to generate an IRR of 16% or more to its investors.

Malaz Real Estate Opportunities Fund II

During January 2014, Malaz Capital purchased an established residential compound in Riyadh, Saudi Arabia, with over 700 units through the Malaz Real Estate Opportunities Fund II, a CMA regulated real estate closed ended private equity fund. The Compound’s value was in excess of SAR1 bn and was fully leased through a long term lease agreement. The Fund’s size was SAR425.0 mn, its term was expected to be 10-12 years during which it was projected to generated approximately an IRR of 19% or more to its investors. The fund was closed and liquidated in 2016, and generated an IRR of 38% to its unit holders.