Merak Capital has launched a SAR200 million (US$53.26 million) Shariah compliant credit fund to provide direct financing to Saudi-based technology and tech-enabled companies including fintech start-ups.
Known as Merak Direct Lending Fund – I, the fund is Merak Capital’s first under the Capital Market Authority’s regulation for direct financing investment fund, which came into effect in March last year.
The Riyadh-based technology investment specialist is aiming to underwrite financing between SAR5 million (US$1.33 million) and SAR20 million (US$5.33 million), and is eyeing a portfolio of 20 borrowers. Companies with a credit history of two to three years are of particular interest.
The fund would be the first of string of credit funds Merak Capital intends to introduce to the market.
Already an investor in fintech, the new fund deepens the funding pool for Islamic fintech in Saudi Arabia. Merak Capital’s fintech portfolio includes digital financing brokers Syaarat and Arib, money transfer app Denarii Cash and online payment solution Hyper App.
“Even though the IT industry has grown and evolved significantly over the past few years, financing did not compliment [sic] this growth, due to the complexities and difficulty in assessment which made it obscure and hence unfavorable to underwriters, resulting in a remarkable funding gap,” the firm said in a statement.