JEDDAH, 15 June 2005 — The Middle East’s first venture capital bank is opening in Bahrain after getting a license from the Bahrain Monetary Agency in May. With the name Venture Capital Bank (VCBank), it will be the first Shariah-compliant VC bank. VCBank will invest in fundamentally strong undervalued, finance-seeking small and medium enterprises (SME), according to officials, and will use a rigorous compliance system to ensure Shariah certification for each investment.
Announcing the registration of VCBank, Dr. Ghassan Al-Sulaiman, chairman of the Incorporating Committee of VCBank and the president of the Jeddah Chamber of Commerce and Industry, said that the region was undergoing tremendous change and the liberalization of economies coupled with the rise in oil prices is spurring increased economic activity. “At the moment we believe that there is a unique investment opportunity for venture capital investment banking in the GCC and MENA Regions,” he said.
As part of its management setup, VCBank has put in place a thorough process whereby it engages its Shariah Advisory Board before it commits itself to an investment opportunity through a rigorous compliance system that identifies the nature of the business of each target company and the manner through which financing will be structured around each deal, thus ensuring Shariah certification for each investment prior to any commitment.
“VCBank will invest in fundamentally strong undervalued, finance-seeking small to medium enterprises (SME’s) with market and revenue growth potential, in addition to a vast array of real estate investment opportunities given the increased demand and appetite for real estate investment products especially in the GCC,” said Al-Sulaiman.
VCBank brings together prominent business leaders from all over the Arabian Gulf, with Al-Sulaiman Group from Saudi Arabia being the strategic partner.
With an authorized capital of $500 million and a paid up capital commitment of $50 million, $25 million of which has already been committed by the founding shareholders, VCBank will have a strong shareholder base that is geographically well spread and diversified in terms of business line, background, risk profile and investment preference. Moreover, the shareholder base will have strong sourcing capacity and significant investment placement power throughout the GCC, with the aim of having an ownership structure of 40 percent from Saudi Arabia, 20 percent from Kuwait, 10 percent from the Kingdom of Bahrain and Qatar, 10 percent from the Sultanate of Oman and the UAE, 10 percent from VCBank’s strategic technical partners and 10 percent from GCC financial institutions.
Abdul Latif Mohamed Janahi, the executive director of VCBank’s Incorporating Committee said that VCBank had linked up with a well-established American venture capital firm, Global Emerging Markets Group (GEM Group), as a key strategic technical partner. GEM Group is one of North America’s leading deal origination, advisory, merger, acquisition, corporate finance, and turn-around firms with a strong focus on emerging markets. Furthermore GEM is expected to play a focal role in the creation of a sustainable venture capital culture within VCBank.
VCBank is the first initiative of its kind to target such a niche market in the region within an investment banking context. It will focus on achieving performance and return to end-investors through facilitating the expansion and growth of promising ventures that lack financial and expansion resources. It further aims to deliver high potential returns, fully managed risks, and significant co-investment opportunities.
