Saudi KFH & Alraedah to establish SME-focused investment fund

By Arya M Nair, Official Reporter
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SKFH_Alraedah SME partnership
Officials at agreement signing

Alraedah Finance Company, a pioneer of bespoke solutions for small and medium-sized enterprises (SMEs), and Saudi Kuwaiti Finance House (SKFH) have signed a strategic agreement to establish a closed-ended investment fund to invest $80 million to support SMEs across all sectors in the Kingdom of Saudi Arabia.

The agreement was signed by the CEO of Alraedah, Mr. Paul Melotto, and Mr. Dahir Al Khald, representing SKFH, aligning the entity’s shared goal of enhancing and empowering SMEs to further stimulate the local economy.

Under this agreement, Alraedah will be the operator of the fund’s assets, adhering to the provisions, programs, and services it provides in the field of financing and within the framework of Islamic Sharia law. Aseel Capital, represented by Mr. Khalid Al Homaid, Chief Investment Officer at Aseel Capital, will distribute part of the units of this closed-ended investment fund to individual investors through collective investment through its innovative digital platform.

Aseel Capital is known for providing innovative financial solutions through the use of technology in crowdfunding, as its digital platform provides an easy and convenient way for retail investors to access mutual fund units. Aseel Capital plays an important role in enabling individuals to achieve their investment and financial goals with ease.

Saudi Kuwaiti Finance House, a leading capital organization in the industry and one of the Kingdom’s fastest-growing financial companies, will cover the fund’s capital in cooperation with Aseel Capital, through a private placement according to the regulations of the Capital Market Authority (CMA).

They will also provide all necessary information and disclosures to ensure transparency and prepare the fund’s structure, terms, conditions, and the most suitable investment process. A key defining element of this agreement is the fund’s target of 14 percent quarterly dividends, the highest in the market.

Paul Melotto_SKFH & Alraedah SME funding agreement
Paul Melotto
CEO – Alraedah

“Alraedah is a leader in financing the SME sector in the Kingdom and acts as a key contributor to Vision 2030 goals to incentivize SME development. Alraedah aims to support the long-term and sustainable growth of SMEs by offering innovative financial products and services tailored to market needs. As a service shortage, SMEs face multiple challenges when scaling their business or growing their operations. This is where Alraedah plays an essential role in supporting SMEs to achieve long-term and sustainable growth, by offering innovative financial products and services that anticipate and proactively address market needs while eliminating existing vulnerabilities.”

Mr. Wail Hilal, Head of Asset Management of SKFH, explained emphasized the importance of small and medium-sized enterprises in the Kingdom of Saudi Arabia, stating how they “play a key role in economic growth, job creation, and development, having a direct impact on local communities, and being a gateway for economic innovation”. Small and medium enterprises in the OECD countries constitute about 99 percent of the total enterprises, and they are considered the main source of employment, providing about 70 percent of jobs. Moreover, in emerging economies, SMEs contribute about 45 percent of total jobs and about 33 percent of GDP.”

The strategic approach adopted by Alraedah aims to expand the formation of integrated partnerships with investment entities in the banking and finance sectors according to strategies and plans commensurate with the new trends in the market, pointing to the company’s keenness to form an advanced approach to its products that distinguishes its performance and financing activities in line with the aspirations of its customers.

Mr. Khalid Al Homaid, Chief Investment Officer at Aseel Capital, expressed that “Through this partnership, we aim to enable SMEs to achieve their strategic and financial goals, which enhances their stability and ability to contribute to the sustainable economic development of the Kingdom and create more job opportunities. Aseel Capital believes that this partnership will contribute to supporting growing companies and enhancing their role in the economy.”

Aseel Capital will continue its efforts to provide sustainable and innovative financial and investment solutions through collective investment that meet the needs of investors and contribute to the sustainable growth of the local and regional economy.

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