#Saudi Wealth Fund Unit to Plow More Money Into Private Credit - Bloomberg

Saudi Wealth Fund Unit to Plow More Money Into Private Credit - Bloomberg

A unit of Saudi Arabia’s Public Investment Fund plans to start funneling more money into private credit, joining other Gulf entities in looking beyond the upheaval roiling parts of the industry overseas.

Jada Fund of Funds — a PIF subsidiary — recently struck a deal to invest with India-based venture debt firm Stride Ventures to help drive capital into the economy, according to Jada Chief Executive Bandr Alhomaly. Stride aims to deploy $200 million into the kingdom in the next two years.

In recent months, the private credit market in the US has come under increased scrutiny over valuations and quality of lending. New York-based Blue Owl Capital Inc. recently shut the gates on one of its funds, fueling a decline in its shares and a drop in other stocks with investments in the space.

The Jada tie-up shows how many Gulf entities continue to bet on private credit, with some executives noting the asset class is still too young in the Middle East to generate widespread concern around risk.

Jada’s Alhomaly said that while the pool of players in private credit is growing, the Saudi market is still nascent and will likely see more regulation as it grows in size.

“Private credit remains significantly untapped in the Saudi market compared to the rest of the world so we really want to increase our allocation,” Alhomaly said in an interview, adding that its focus is on investing in funds that do deals in the kingdom. “It’s a priority asset class for us.”

Launched in 2018 with about $1 billion in capital from the PIF, Jada has deployed almost $600 million across some 50 funds, according to Alhomaly. Its mandate involves developing the private capital ecosystem, while advancing the sovereign wealth fund’s agenda to drive Crown Prince Mohammed bin Salman’s economic diversification plan.

Jada has in the past focused on venture capital and private equity, with a goal of driving funding to small- to medium-sized enterprises. It will continue to focus on financing SMEs through private credit as Saudi banks slow lending growth, Alhomaly said.

More players in the Gulf are looking to capitalize on new private credit deals sprouting from the need for alternative financing. The $580 billion Qatar Investment Authority is investing in a private credit firm run by former Goldman Sachs Group Inc. partners. In Abu Dhabi, Mubadala Investment Co. has been a prolific backer of private credit.