#Saudi SAB Invest Makes First Foray Into MENA Private Credit - Bloomberg

Saudi SAB Invest Makes First Foray Into MENA Private Credit - Bloomberg

Saudi Awwal Bank’s investment arm plans to raise as much as one billion riyals ($266 million) for its first private credit fund focused on the Middle East and North Africa.

SAB Invest has already secured about $100 million from regional wealth managers and family offices and intends to raise the rest within the next year, according to Osama Alowedi, chief investment officer.

The Shariah-compliant fund will invest in debt financing including sukuk issued by small and medium-sized enterprises, venture debt and debt instruments for infrastructure projects, Alowedi said. It’s targeting an annual cash yield of 10% to 11%.

“We are now in the deployment process,” Alowedi said in an interview on Thursday. “At least 60% of the total fund will be allocated to opportunities within Saudi Arabia.”

The move by SAB Invest comes as Saudi Arabia seeks to further develop the financial sector to attract more foreign capital and drive investment into the kingdom’s economic overhaul. The Saudi sovereign wealth fund in March agreed to anchor new regional funds from Goldman Sachs Asset Management, with private credit a key focus.

The asset class is gaining traction across the region and now both competing and partnering with traditional lenders, according to PricewaterhouseCoopers LLP. It estimates the market in the broader Gulf and Egypt may expand by a compound annual growth rate of as much as 30% over the next five to six years.

SAB Invest, which manages more than $9 billion in assets, is an independent subsidiary of Saudi Awwal Bank. HSBC Holdings Plc is a top shareholder in the parent company.