Riyadh, Saudi Arabia: Merak Capital launched its first credit fund under the Capital Market Authority new regulation for direct financing investment funds, “Merak Direct Lending Fund - I”. The 200 million SAR ($53 million USD) shariah-compliant fund is designed to provide direct lending to Saudi-based technology, tech-enabled, and  high growth companies to help them finance short to mid term commitments and enhance their ability to scale.

The new fund aims to capture the great opportunity within the SME funding gap in the Kingdom. It will provide companies with an alternative access to financing in line with the Saudi Vision 2030, which aims to diversify the economy and create more opportunities for SMEs.

“We are thrilled to launch our first direct lending fund and to provide a much-needed financing option to Saudi-based IT and tech-enabled companies. Our aim is to help these companies realize their potential and to contribute to the rapid economic growth in Saudi Arabia'' said Mohanned Alfayez, Partner at Merak Capital. He added: “On the other hand, we are committed to provide our investors with new opportunities for diversifying their investment portfolios and to unlock the potential of the Private Debt asset class in the local market.”

The fund aims to underwrite loans between 5 to 20 million SAR, targeting a portfolio of 20 borrowers. By focusing on companies that have a financial history of 2 to 3 years, Merak Capital intends to address an underserved segment in Saudi’s middle market. 

Even though the IT industry has grown and evolved significantly over the past few years, financing did not compliment this growth, due to the complexities and difficulty in assessment which made it obscure and hence unfavorable to underwriters, resulting in a remarkable funding gap.

Merak Capital intends to launch more credit funds addressing this expanding opportunity, capturing the major demand from borrowers and investors alike.