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QDB launches QR365 mn equity fund to help SMEs.

Satyendra Pathak


The Qatar Development Bank (QDB) on Sunday launched QR365 million 'SME Equity Fund' to boost the private sector in the country.

A first-of-its-kind and the largest in Qatar, the fund aims to support economic diversification by providing growth capital to Qatari entrepreneurs.

The 'SME Equity Fund' is the first product under 'Istithmar' which provides direct (equity) investments from QDB to Qatari entrepreneurs for financial and non-financial support.

At a press conference to launch the new product, QDB CEO Abdulaziz bin Nasser al Khalifa said the fund will deploy investments in innovative start-up companies and high-growth potential small & medium enterprises (SMEs) owned by Qataris.

The fund, he said, is designed to encourage new and innovative projects that will contribute to the country's economic diversification, generating value neutral returns that can be re-invested in subsequent funds to help and support the economy.

The fund will assist in building capabilities and help accelerate the development of Qatari SMEs to world class standards, he said.

QDB Investment Executive Director Mohammed al Khater Khater said 20 percent of the fund will be invested in innovative start-ups and 80 percent in growth SMEs with active involvement of Qataris in management.

Innovative start-ups will get funds in the range of QR1.5 million to QR7 million, while growth SMES will get financial support ranging from QR3.5 million to QR18 million.

Khater said the fund will be unique in that it will be able to provide direct investments in equity which are typically reserved for higher risk businesses with high growth potential.

Investors in this type of initiative take up an equity stake in the business with the objective of selling the stake in the future at a profit once the business has experienced growth and expansion, he said.

"In addition to financial support, equity investors are more actively involved in the business, and have a seat on the board for example, in order to support and guide the entrepreneur in growing their business,"he said.

To facilitate access to finance and support entrepreneurs, Khater said, the bank has tailored this initiative to cover three core phases of pre-investment, investment execution and post-investment.

The life term of the 'SME Equity Fund' reaches up to 10 years with five years for deployment and 3 to 5 years of holding period.

Adopting a sector-agnostic approach, the fund will focus on supporting viable businesses with preference for strategic sectors except construction, contracting and trade.

With target shareholding of less than 50 percent stake, the fund will have equity buy-back option with pre-determined conditions for entrepreneurs.

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Publication:Qatar Tribune (Doha, Qatar)
Date:Sep 14, 2015
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