Venture Capital Bank (VCBank), the first dedicated Islamic venture capital investment bank, has announced the upcoming launch of a US$250 million venture capital fund – the first of its kind – focusing on investment in small and medium-sized enterprises (SMEs) in the GCC and MENA regions.
The Fund, which will be jointly established and co managed by Global Emerging Markets (GEM) Group, a leading US-based private investment firm with offices in New York, London and Paris, will target fundamentally sound and undervalued finance-seeking companies across a diverse range of industry sectors. Specifically, investee companies will possess strong management teams, proven track records and outstanding potential for revenue growth and market leadership.
The Fund will be launched and marketed during the first quarter of 2006 and VCBank and GEM Group will together seek to raise capital from high net worth individuals and institutions from across the GCC region and internationally.
Through the Fund, investors can take advantage of significant and untapped opportunities in the region offered through this alternative asset class, which have not previously been made available to them by other regional financial institutions. In doing so, the Fund will be structured and managed so as to ensure maximum efficiency in terms of tax benefits for international investors as well as superior rates of return, with IRR expected at approximately 25% percent over the anticipated three to four year investment period.
Commenting on the announcement, Abdul-Latif Janahi, Chief Executive Officer of VCBank, said, “We are delighted to announce the upcoming launch of this Fund, which will enable us to begin to identify and invest in promising small and medium-sized enterprises throughout the GCC and MENA region. With a well seasoned management team in place and in conjunction with GEM, a world-wide leader with considerable expertise in emerging markets, we stand poised to take a leadership role in the growth of the regional venture capital industry and to deliver superior-risk adjusted returns through this Fund and what we believe to be a niche asset class.’’
“Together with VCBank, we see a tremendous opportunity in the GCC and MENA region for venture capital and are confident that this pioneering Fund will enable us to provide investors with a unique investment product and strong performance through the provision of funding and support for well managed, entrepreneurial companies that lack the necessary financial resources for further expansion and growth,’’ said, Chris Brown, Executive Director of GEM Group. ‘’Combining the expertise and track record of GEM Group and the strength of VCBank’s management team and regional expertise, we anticipate this to be a highly successful Fund and one that will set the benchmark for the region’s developing venture capital industry.’’
In addition to the co management of the Fund, GEM Group and VCBank have concluded a strategic partnership whereby GEM Group will play a critical role in supporting VCBank as it works towards the creation of a sustainable venture capital culture at the Bank and across the region, leveraging GEM’s position as one of North America’s leading deal origination, advisory, M&A, corporate finance and turn-around firms.