Ajeej Capital and Nuwa Capital launch $100m fund to boost tech companies in Middle East

Amplify Growth Fund aims to address gap between capital demand and supply in region, says executive

A technology company displays a working robot at Gitex in Dubai last year. Leslie Pableo / The National

Ajeej Capital has partnered with Nuwa Capital to launch a $100 million debt capital fund aimed at fuelling the growth of technology-focused companies in the Middle East, North Africa, and Turkey, with a strong emphasis on the GCC markets.

The Amplify Growth Fund I is aimed at addressing the “debt capital demand-supply gap” in the region, and focuses on the “diverse range of opportunities” offered by the UAE and Saudi Arabia, its top executive said.

The fund has already closed its first transaction with a Saudi Arabia-based FinTech company. However, the amount of the investment has not been disclosed.

“Supply is limited due to the scarcity of private debt players, particularly those focused on technology-driven firms. Additionally, banks do not focus on this segment,” Sharaf Sharaf, who leads the fund, told The National.

“On the demand side, many companies have become large enough to be able to manage a debt investment … as these founders scale, they seek a less dilutive form of capital to sustain their growth while retaining the equity value that they are creating.”

Moreover, the region's regulators are boosting the technology ecosystem, along with refining laws and regulations that offer stronger protection for capital providers, “which in turn boosts confidence in our launch”, Mr Sharaf said.

In the first half of this year, start-ups in the Mena region secured $768 million in funding, a 34 per cent drop compared with last year, according to analytics company Magnitt.

However, excluding deals worth more than over $100 million, funding for agreements rose by 3 per cent compared to the same period last year.

Investor participation in the region is also high. In the first half of the year, the number of investors increased by 30 per cent to 262, with 36 per cent of investors being based in Saudi Arabia and the UAE.

Amplify said it intends to accelerate the growth of technology-driven businesses in the series A to series C stages, with a primary investment focus on companies with proven market demand that are actively scaling their business.

Up to 20 per cent of the fund’s capital will be allocated to businesses outside the Middle East that aim to enter the region, as well as to traditional enterprises integrating technology into their operations.

“We are targeting companies with strong founders, resilient business models and high growth prospects,” Mr Sharaf said.

“At the same time, we also seek to ensure that the company can repay our capital investment, so we also focus on the sustainability of the company’s current and projected cashflows.”

The fund has got strong backing. Ajeej Capital, based in the Dubai International Financial Centre, is one of the leading regional asset managers with more than $1 billion in assets.

While, founded in February 2020, venture capital firm Nuwa Capital was among many looking to invest in start-ups tapping into a technology boom fuelled by the pandemic in the region.

Although the GCC venture capital market is not as large or established as certain western markets. such as the US, it has some “very positive” attributes, Mr Sharaf said.

“The region enjoys a young and increasingly tech-focused population as well as a welcoming and supportive environment due to forward looking governmental initiatives.”