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Investment company Shorooq has ambitions to become the Blackstone of the Middle East to fill a gap in the market for private investors that pushes economies forward.
Founding partner Mahmoud Adi credited Saudi Arabia as a cornerstone of what the investment firm is working to achieve, citing consumer confidence in the kingdom’s economic growth as contributing to significant opportunities for companies to build up products and services.
Shorooq has $500 million assets under management and counts Saudi-based buy now, pay later (BNPL) firm Tamara and UAE-based vertical farm Pure Harvest among its investments.
Sovereign wealth funds (SWF)-backed entities such as Abu Dhabi-based Lunate as well as Mubadala and the Saudi PIF-backed Jada Fund of Funds are investors in its funds.
Shorooq sees itself as the potential Blackstone of the region, as it works with companies from seed funding stage up until IPO.
Early-stage companies are not able to access SWF capital alone, Adi told Zawya on the sidelines of the kingdom’s Future Investment Initiative conference in Riyadh this week, but the existence of Shorooq allows that to happen.
Other early-stage companies such as investment and personal finance app Sarwa, peer-to-peer lender Lendo and digital freight platform Trukker are among Shorooq’s portfolio.
One of its most recent investments was leading a $15 million round into UAE-based fintech Abhi, a lending platform aimed at allowing blue collar workers to access their salaries in advance of paydays.
Saudi Arabia’s IPO market, with all but one of the GCC’s seven IPOs taking place in the kingdom in Q3 2024, makes it even more attractive, Adi said, as an IPO allows control of the destiny of the company, and for early investors to see their money back.
Shorooq launched a $100 million private credit fund six months ago, in response to another gap in the market, Adi said, with Tamara and Pure Harvest being among earlier recipients of credit.
The decision to launch credit was because Shorooq saw its portfolio companies growing but struggling to access alternative non diluted capital in the market, he stated.
Credit is one of the most scalable asset classes, he added, which is extremely crucial to unlock value in economies.
“We go back to the vision, we believe that a Blackstone equivalent in the region, a well-run Shorooq, will be able to unlock more value for everyone in the ecosystem and that’s where we think credit plays a critical role.”
Tamara is one of two ‘winners’ in the BNPL space along with its rival Tabby, which is reported to be heading for an IPO in 2025.
The decision to go public is a decision for the founder and the company, Adi said of the fact that Tamara has not yet announced similar IPO plans.
“The IPO is important for a company but it’s not the end of the story. It does give the company a permanent capital structure and gives the investor an early opportunity to cycle back some of the money,” he said.
“What you don’t want to do is rush into IPO and have a failure.”
(Reporting by Imogen Lillywhite; editing by Bindu Rai)
