Investcorp floats pre-IPO fund for Saudi firms; OQAL rolls out early-stage fund

 Investcorp floats pre-IPO fund for Saudi firms; OQAL rolls out early-stage fund

Bahrain-based alternative investment firm Investcorp has launched a growth fund to invest in Saudi Arabian companies before their initial public offerings.

The fund will look to raise $500 million and will target “high growth” and “underserved” sectors such as healthcare, consumer, transport and logistics, and business services, Investcorp said.

The new vehicle will invest in a diversified portfolio of companies at a pre-IPO stage, Investcorp said, adding that it will provide investors with an opportunity to gain exposure to growing and market-leading businesses in the country.

“’We have established a track record of partnering with leading family-owned businesses and taking them public on Tadawul making us the only private equity firm to successfully list four businesses on the exchange,” said Walid Majdalani, Investcorp’s head of private equity for the Middle East, North Africa and Southeast Asia.

Investcorp opened its Riyadh office in 2008, and has so far invested in seven businesses in the country. It has publicly listed four Saudi businesses on the Tadawul stock exchange. These are: BinDawood Holdings, Theeb Rent A Car, Leejam Sports Company, and L’azurde. Its portfolio companies employ over 23,000 employees across the country.

OQAL

OQAL, a Saudi Arabia-based network of angel investors, has launched a new vehicle to fund early-stage startups in the Middle East and North Africa (MENA) region.

Named OQAL Note, the new Shariah-compliant vehicle has been launched in partnership with the Saudi Venture Capital and Private Equity Association.

Founded in 2011 by Faris AlRashed, OQAL is an endowment platform connecting startup founders with angel investors to develop innovative enterprises.

Although OQAL did not divulge the fund size of the new investment vehicle, the network said in a release that it will be on the lines of KISS, a financing instrument by 500 Startups (now 500 Global) and YCombinatorSAFE. In both these instruments, the initial investment is initially structured as debt, before it is eventually converted into equity.

OQAL said that OQAL Note will help entrepreneurs in three ways. One, it will provide them with a Shariah-compliant investment option. Two, it is subject to both Saudi and English legal systems. And three, business can be transacted both in Arabic and English.

“As an early-stage investor, we have noticed that founders and investors are becoming more comfortable with such financial instruments,” AlRashed said. “However, we are always faced with questions or concerns with regards to its Shari’ah compatibility. With the OQAL Note, OQAL Network and our partners aim to induce further comfort and convenience in using such instruments,” he added.

Aman Malik

The Capital Quest