Kuwait’s leading investment management firm Watani Investment Company’s (NBK Capital) alternative investments arm, NBK Capital Partners has completed the first close of a new Sharia credit fund worth $300 million anchored by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund.
The asset manager said that the new fund will provide Sharia-compliant, long-term direct lending to mid-sized firms in the Middle East that are unable to secure attractive financing terms.
Yaser Moustafa, Senior managing director of NBK Capital Partners, commented in a statement, “We are proud to have secured the full faith and endorsement of one of the world’s largest and most respected sovereign wealth funds.”
He added that its participation was an affirmation of its potential and a sign of “increasing investor confidence in the region’s private credit sector”
The company stated that its new fund will target firms in the UAE, Saudi Arabia, and “select adjacent markets”, to address the funding shortfall faced by several mid-sized regional enterprises. It plans to make between 10 and 12 loans of between $15 to $50 million over its eight-year lifespan and generate “attractive cash yield and total returns”.
According to a report published by UK-based capital market company Preqin, the private debt market has continued to grow in 2020 despite the global pandemic. Assets under management in the sector were $887 billion as of June 2020, marking it as the third-largest private capital asset class behind private equity and real estate.
The level of new funds raised last year was slightly below to 2019 totals, but remained “robust” at $118 billion. Further, It has forecast that private debt assets will increase to $1.46 trillion by 2025.
David Lowery, Head of research insights at Preqin said, “In a search for yield and higher returns, investors are turning to private debt. This growing demand … met by the fund management industry, should lead to further strong growth from the asset class.”