Dubai financial center unveils $100m fintech fund

Essa Kazim, the governor of the DIFC, announced the fund at the Global Financial Forum. (DIFC)
Updated 15 November 2017
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Dubai financial center unveils $100m fintech fund

DUBAI: The Dubai International Financial Center (DIFC) has launched a $100 million fund for investment in financial technology, the fastest-growing sector of the global financial services industry.
The fund will be invested from the UAE hub’s own internal resources, but may also get backing from other Dubai government entities, though private-sector bank finance has been ruled out.
Essa Kazim, the governor of the DIFC, announced the fund at the DIFC’s Global Financial Forum.
Other financial centers in the region have also identified fintech as a growth area.
Kazim said: “The fund is to help establish, grow and upscale startup and growth-stage fintech firms looking to access markets in the Middle East, Africa and South Asia. The fund will leverage the DIFC’s fintech ecosystem consisting of attractive experimental licenses, market-leading pricing and collaborative spaces.
“There is immense opportunity in this market, and this will be one more step toward shaping the future of finance in the region,” he added.
Earlier this year, the DIFC announced its dedicated fintech premises, dubbed the Hive, which aims to accelerate growth in the sector, in collaboration with local and international banks. The first 11 fintech firms at the Hive were announced recently.
Kazim said that the fund “is set up, it’s there, it’s supported from our own internal resources. We are ready to spend money, but it depends on the opportunities,” he added, insisting that investments would be decided by certain criteria.
The fund would be available for small- and medium-sized startup ventures, he said.
“It’s $100 million in total, so you would be thinking of smaller companies. It’s not $1 billion in Uber, it’s not that. It’s really to support the startups, the smaller sized companies. Some companies probably need around $50,000, and some maybe need $1 million or $2 million,” Kazim added.
Fintech has emerged as a growth area since the DIFC announced a 10-year strategy to triple in size by 2024.
“In certain areas, probably, we have passed our targets but other areas we are probably lacking a bit. One area is employment. Although the number of licenses are on track, attracting companies, and our offices are fully leased out in terms of DIFC-owned buildings, we could still do more in employment. But it’s not significant. We will catch up as we go further,” Kazim said.
“If you look at our own statistics, prior to the drop in the oil price we were averaging 150 companies licensing a year. After that, the average jumped to 300 companies a year.”


Saudi stocks receive landmark emerging markets upgrade from MSCI

Updated 18 min 2 sec ago
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Saudi stocks receive landmark emerging markets upgrade from MSCI

  • Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months
  • MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds

LONDON: Saudi Arabian equites are poised to attract up to $40 billion worth of foreign inflows, following a landmark decision by index provider MSCI to include the Kingdom’s stocks in its widely tracked Emerging Markets index.

"MSCI will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, representing on a pro forma basis a weight of approximately 2.6% of the index with 32 securities, following a two-step inclusion process," the MSCI said in a statement late on Wednesday night Riyadh time.

“Saudi Arabia’s inclusion in MSCI’s EM Index is a milestone achievement and will likely bring with it significant levels of foreign investment,” Salah Shamma, head of investment for MENA at Franklin Templeton Emerging Markets Equity, told Arab News. 

“It is a recognition of the progress Saudi Arabia has made in implementing its ambitious capital markets transformation agenda. The halo effect of such a move will be felt across the stock exchanges of the entire Gulf Cooperation Council (GCC).”

Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months to bring local capital markets more in line with international norms, including lower restrictions on international investors, and the introduction of short-selling and T+2 settlement cycles.

Such reforms prompted index provider FTSE Russell to upgrade the Kingdom to emerging market status in March, opening the country’s stocks up to billions worth of passive and active inflows from foreign investors.

MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds. The inclusion of Saudi stocks in the index, alongside FTSE Russell’s upgrade, is forecast to attract as much as $45 billion of foreign inflows from passive and active investors, according to estimates from Egyptian investment bank EFG Hermes. 

The upgrade announcement was widely expected by the region’s investment community, following a similar emerging markets upgrade announcement by fellow index provider FTSE Russell in March. 

“MSCI index inclusion will be a historic milestone for the Saudi market as it will allow for sticky institutional money to make an entry in 2019 which will help deepen the market,” said John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh.