ADGM-based Aliph Capital receives $125m investment from ADQ

Aliph Capital’s maiden $250m fund aims to provide growth capital to mid-sized companies in the UAE and the GCC

ADGM-based Aliph Capital will seek to acquire sizeable positions in privately owned mid-market companies across the region. Victor Besa / The National

Aliph Capital, a GCC-focused private equity fund manager, has received a $125 million investment for its maiden fund from Abu Dhabi-based holding company ADQ.

Aliph Fund I (LP) is a $250m target private equity fund domiciled in the Abu Dhabi Global Market.

The fund aims to invest in “high quality” mid-sized companies in the UAE and across the GCC to speed up their expansion and growth trajectory, the fund manager said on Monday.

“The timing is perfect for GCC-based private equity to invest in the region’s mid-market growth stars, who — when fully equipped with digital and tech enablement levers — will generate significant returns and power the ongoing diversification and transformation of the GCC economy,” said Huda Al Lawati, founder and chief executive of Aliph Capital.

Venture capitalists and state-backed investors are boosting investments in start-ups as they become an increasingly important part of the global economic development agenda.

Globally, the value created by start-ups stands at about $3 trillion, which is almost at par with the economic output of a G7 economy, according to advisory company Startup Genome.

Funding for these companies broke records in 2021 when it hit $621 billion, according to CB Insights.

Companies in the UAE raised $699m in the first half of 2022, ranking the Emirates as the leading country for venture capital financing in the Mena region, according to data platform Magnitt.

The UAE also led the region in terms of deals, which grew by 10 per cent in the six-month period from a year ago, with the biggest deal being a $181m convertible note mega-round for Abu Dhabi-based Pure Harvest in June.

The Arab world’s second-largest economy attracted more than $1.47bn in venture capital in 2021, according to Magnitt data.

Aliph Capital will seek to acquire sizeable, active positions in privately owned mid-market companies across the GCC that possess robust business fundamentals to realise attractive returns through active ownership, combined with strong value-creation opportunities, institutional governance standards and digitalisation, the fund manager said.

The alternative investment manager aims to hasten growth and scale up companies by helping them to adopt technology platforms and tools to grow revenue, optimise operations, cut costs and generate attractive returns, Aliph Capital said.

Murtaza Hussain, chief investment officer for alternative investments and mergers and acquisitions at ADQ, said the holding company's investment in Aliph Capital “underlines our commitment to delivering on a financially driven mandate that creates long-term value for Abu Dhabi”.

“Building a strategic partnership with an Abu Dhabi-based private equity fund dedicated to serve SMEs further supports our aim to accelerate sustainable economic development and growth within the UAE and [the] region,” he said.

“Together, we will work in partnership to capture growth opportunities, which complements our core portfolio and enables us to generate attractive, risk-adjusted returns.”

Established in 2018, ADQ is an Abu Dhabi-based investment and holding company with a broad portfolio spanning industries that include energy and utilities, health care and pharmaceutical, mobility and logistics, food and agriculture and financial services.

In March, ADQ consolidated its venture capital activities under DisruptAD, which invests in start-ups and venture capital funds, as well as creates new incubators and accelerators to support Abu Dhabi’s position as a global start-up centre.

DisruptAD aims to support more than 1,000 start-ups over the next five years. Beyond the UAE, the platform is focusing on markets in the broader Mena region, South-East Asia, as well as India, China and the US, according to an ADQ statement at the time.

DisruptAD is also responsible for the Dh1.1bn ($300m) Alpha Wave Incubation Fund that focuses on Indian and South-East Asian start-ups. It also manages the Dh535m Ventures Fund, a flagship initiative of the Ghadan 21 programme.