NBK Capital attracts Saudi Arabia's Public Investment Fund as anchor investor in $300m fund

The vehicle will target 10-12 investments of between $15m-$50m in mid-sized companies across the region

NBK Capital's new private credit fund will target debt investments in mid-sized companies in Saudi Arabia, the UAE and other neighbouring territories. Ryan Carter / The National

NBK Capital Partners completed the first close of a new $300 million private credit fund anchored by Saudi Arabia's sovereign wealth fund, the Public Investment Fund.

The asset manager said the new fund would offer Sharia-compliant, long term direct lending to mid-sized companies in the Middle East that are unable to secure attractive financing terms.

“We are proud to have secured the full faith and endorsement of one of the world’s largest and most respected sovereign wealth funds," the company's senior managing director, Yaser Moustafa, said in a statement.

He added that its participation was an endorsement of its capabilities and a sign of "increasing investor confidence in the region’s private credit sector".

NBK Capital Partners, a subisidiary of Kuwait's biggest lender National Bank of Kuwait, is an alternative assets manager based in the Dubai International Financial Centre.

Its new fund will target companies in the UAE, Saudi Arabia and "select adjacent markets", looking to address a funding shortfall faced by many mid-sized regional companies. It expects to make between 10 and 12 loans of between $15m-$50m over its eight-year lifespan and generate "attractive cash yield and total returns", the company said.

The private debt market continued to grow in 2020 despite the global pandemic. Assets under management in the industry stood at $887 billion as of June 2020, making it the third-largest private capital asset class behind private equity and real estate, according to a report published earlier this month by Preqin. The level of new funds raised last year was slightly below to 2019 totals, but remained "robust" at $118bn, the research company said.

It predicts that private debt assets will grow to $1.46 trillion by 2025.

"In a search for yield and higher returns, investors are turning to private debt. This growing demand ... met by the fund management industry, should lead to further strong growth from the asset class," Preqin's head of research insights, David Lowery, said.

The sector has also attracted greater interest from Middle East investors. Mubadala Investment Company became the cornerstone investor in a $12bn direct lending platform created by Apollo Global Management, one of the world's biggest alternative asset firms, to invest in deals of up to $1bn in July last year.

In September, it partnered with investment firm Barings to form a platform that will look to lend up to $3.5bn to European mid-market companies over the next 18 months.