The M&A team at Hammad & Al-Mehdar advised VentureSouq and its managed funds as lead investor in the $30.5m Series B equity financing of Sary, a Saudi-based B2B marketplace connecting small businesses with wholesalers and lenders.
The HMCo team was led by partner Abdulrahman Hammad, and included Samy Elsheikh, Tarek Bilani, and Dina Golfaridan.
Saudi Arabia’s Central Bank has announced that Fintech companies can join the national Mada payment system. Saudi Payments said the companies STC Pay and Geidea had joined the network as the first two non-banking companies to join the service.
The aim is to enable financial companies to support the private sector and establish a financial infrastructure. The licenses given to the Fintech companies mean they can issue digital and plastic Mada payment cards to enable customers to make payments online or withdraw money. They will also provide hosting services for Point of Sale devices to merchants directly and provide them with Point of Sale devices with complete services. To learn more, contact us.
In October 2018, a Royal decree was issued approving the regulatory framework for an “Integrated Logistics Bonded Zone” (“ILBZ”) and had assigned its establishment and operation to the General Authority for Civil Aviation (“GACA”) as the Zone Governing Body. GACA has now launched Saudi Arabia’s first ILBZ, which serves as the pilot project in following His Royal Highness Crown Prince Mohammed bin Salman’s Vision 2030 to transform Saudi Arabia’s strategic location into a transportation and logistics hub connecting three continents – Europe, Asia, and Africa. This complies with the major strategic plan of Saudi Arabia to become one of the ten largest city economies in the world.
The ILBZ will be located next to King Khalid International Airport in Riyadh. The three million-square-meter zone is strategically located to serve more than 650 million customers across Africa, Asia, and Europe, linking them through King Khalid International Airport and the domestic and regional markets via the Saudi Land-Bridge Railway crossing Riyadh, and dry ports surrounding King Khalid International Airport.
The ILBZ will enjoy special rules and regulations aiming at attracting more multinational companies to the Kingdom. The zone development offers a significant opportunity for international companies to strengthen their operations, efficiency, and market reach. Prospective incentives that Saudi Arabia will provide to the multinational companies establishing operations at the ILBZ will include:
The ILBZ offerings are tailored for multinational companies, supporting a wide range of activities and facilities, including aviation facilities, cargo handling, warehousing and fulfillment, inventory management, maintenance and repairs, staging, testing, and assembly, government-sponsored training programs, and advanced cargo-tracking technology, alongside a Government Services Office in the ILBZ to serve as a one-stop-shop to obtain any government services for the investors.
By serving as a unified hub where companies can engage in these activities and access a vast network of transportation corridors by air, land, and sea, the ILBZ is expected to enable the Kingdom of Saudi Arabia to become a global logistics hub increasingly central role in world trade.
The Abu Dhabi Global Market (the “ADGM”) has now enacted its Data Protection Regulations on 14 February 2021 (the “ADGM Data Protection Regulations”). The ADGM requires entities to adopt with the published ADGM Protection Regulations within 12 months for existing establishments and 6 months for new establishments starting from 14 February 2021.
The ADGM Data Protection Regulations are available on the ADGM official portal. Read more>>
Recently, Saudi Arabia used its ‘Public Investment Fund’ to launch a venture called Jada, worth $1.07 billion. Here’s some information on the news, in addition to how it affects potential startups.
Introduction to Jada
Jada is planning on investing in both private equity funds and venture capital. The company is looking to add a spark for SME investment in addition to getting some extra jobs going in the region for those who live in the country. There was a ceremony that launched the company in Riyadh on a Tuesday. Those associated with the fund announced that Jada would also invest in companies like Raed Ventures and Vision Ventures.
Jada is now known as the “fund of funds” as a result of the press. The expectation is that the fund will create 2,600 new jobs and add a hundred million dollars USD to the GDP by the end of the year in 2020. The expectation is that this will only continue to rise throughout the years, with the projection going all the way up to 58,000 jobs and billions of dollars by the end of 2027. This is only one of the options that the Public Investment Fund, or PIF, is focusing on for increasing wealth in the region.
Jada, The PIF, and Saudi Arabia’s Plans
The belief is that the PIF has as much as $180 billion in assets. The plan appears to be to use this to create reforms economically that will reduce how much Saudi Arabia has to depend on foreign oil exports as well as, potentially, other foreign exports. The goal appears to be to use some of the money from oil in the region, such as a few percentage points of the funds in Aramco, to start stimulating non-oil companies in the private sector to keep the fund’s assets growing throughout the world and stimulating the economy in the region.
One of the sources of this insight into how the fund will be used comes directly from the Crown Prince Mohammed Bin Salman, who said that they hope to use from half up to more than two-thirds of the fund to invest domestically. In other words, Jada is only one piece of the whole puzzle, which is pointing towards some of the most significant opportunities coming from a country’s government funding that startups throughout the world had ever seen.
In the recent past, in addition to Jada, the PIF has added as much as $45 billion in investments for SoftBank technology, for example. They also had $20 billion to invest in Blackstone in the U.S., related to their infrastructure.
The PIF has even announced schemes to create new projects in Medina and Mecca and to even work on the waterfront of Jeddah in terms of real estate. On top of all that, the PIF will be the chief investor for a 129 square mile block of land in Riyadh, which is being described as an “entertainment city.” It will be full of recreational buildings and cultural opportunities.
Opportunities
All this is to say that Jada is just one of the ventures that Saudi Arabia is using to expand its investments. There is money coming from Jada, which will be specifically used on startup companies, and other investments will be used in other sectors as well, including entertainment and real estate.
Along with Jada, Saudi Arabia also has a vast IT market, and the country has announced partnerships leading to 4 Billion in the initiative over the next five years.
Therefore, regardless of what sector a startup is focused on, there’s a good chance that there will be money available for using it to develop some aspect of Saudi Arabia, including potentially both from Jada and from other parts of the PIF. This includes the Jeddah Waterfront Corniche for real estate, tourism, and commercial projects that will begin construction between now and the end of 2022, for example. It will include Riyadh metro projects designed to relieve the congested capital, which is ongoing over the next four years, the Kingdom Tower in Jeddah, the Red Sea Beach Tourism Project, and many others besides.
Each of these projects will no doubt have essential requirements in all sectors connected to them. It won’t just be craned physically moving dirt around; it will be recreation vendors of all sorts to expand the tourism of the area, for example. Saudi Arabia is very interested in reducing its reliance on oil, and the Red Sea Beach Tourism Project, in particular, is focused on more than 50 islands that will become tourist areas withdraws of just about anything one can imagine in the department of vacationing and recreation.
The key will be in finding inroads with the Saudi government to see how a company’s particular assets and skills could be of use to the Saudi government to connect into one of these many projects that start with Jada but branch out endlessly from there in all directions.
Taking Advantage
For startups to take advantage of the enormous potential of this investment fund, they are going to need lawyers who are highly familiar not only with the law in Saudi Arabia and how the climate works there but specifically with this particular field. Firms that have much experience in these two aspects of the deal are going to be vital in assisting SMEs and startups with gaining access to these funds and thriving in that environment.
With this in mind, please don’t hesitate to go ahead and contact HMCO today. They have the experience required in Saudi Arabia, and with this particular law and financial situation to make sure that your startup will gain the funds it needs to go on to succeed. The quicker you contact them, the faster your success will be assured, and the more likely you’ll be able to make use of the Kingdom’s funds for mutual success all around.
It’s important not to hesitate since the projects from Jada and beyond are all happening right now.