DIFC un­veils $100 mil­lion fin­tech in­vest­ment

The National - News - - BUSINESS - MAH­MOUD KASSEM

The Dubai In­ter­na­tional Fi­nan­cial Cen­tre (DIFC) has es­tab­lished a US$100 mil­lion fund to in­vest in fin­tech star­tups, the lat­est move in the free zone’s bid to po­si­tion it­self as the re­gional cen­tre for the fast-grow­ing and dis­rup­tive sec­tor.

“We re­ally want to con­sol­i­date the po­si­tion of the DIFC to be at the fore­front of the changes that are go­ing to hap­pen in the fi­nan­cial sec­tor,” Essa Kazim, the DIFC’s gov­er­nor, said on the side­lines of the DIFC-or­gan­ised Global Fi­nan­cial Fo­rum in Dubai yes­ter­day.

“This is some­thing that we re­ally want to sup­port in the re­gion. You can see that it’s un­der­ser­viced today and that in­clu­sion is very min­i­mal. The al­lo­ca­tion of fund­ing go­ing into this busi­ness in the Mid­dle East is very lim­ited as a per­cent­age of the to­tal.”

The fund will seek in­vest­ment from other gov­ern­ment en­ti­ties in Dubai to boost its cof­fers, said Mr Kazim. It will not ini­tially seek money from pri­vate in­vestors. The fund will be man­aged by the DIFC, he added.

Mr Kazim said in­vest­ment de­ci­sions would be made on a purely com­mer­cial ba­sis, with no pre­set min­i­mum or max­i­mum amount of in­vest­ment. He said that some fin­tech ven­tures may need as lit­tle as $50,000 in fund­ing, while oth­ers could re­quire as much

as $2m.

The launch of the fund comes days af­ter the DIFC an­nounced the launch of two fin­tech ac­cel­er­a­tor pro­grammes, de­signed to men­tor fledg­ling com­pa­nies and to pro­vide in­tro­duc­tions to more es­tab­lished fi­nan­cial ser­vices firms that may be in­ter­ested in their ser­vices.

The DIFC’s fin­tech ini­tia­tives – which also in­clude its Fin­tech Hive in­cu­ba­tor pro­gramme launched in Jan­uary – come amid ef­forts by other fi­nan­cial cen­tres across the re­gion to at­tract fin­tech start-ups and in­vest­ment.

Abu Dhabi Global Mar­ket has launched sev­eral ini­tia­tives in the space, in­clud­ing its RegLab sand­box pro­gramme, and the Fin­tech Abu Dhabi In­no­va­tion Chal­lenge, launched in con­junc­tion with KPMG. Fi­nan­cial cen­tres in Bahrain, Qatar and Saudi Ara­bia have all launched sim­i­lar fin­tech ini­tia­tives. But Mr Kazim said the DIFC was un­in­tim­i­dated by the prospect of com­pe­ti­tion from around the re­gion, say­ing there is plenty of room for play­ers in the fin­tech field, es­pe­cially as it is new and un­der-rep­re­sented.

The global fin­tech sec­tor has at­tracted more than $50 bil­lion in in­vest­ment since 2010, ac­cord­ing to Ac­cen­ture, but the Mid­dle East and North Africa has re­ceived only about 1 per cent of this fig­ure.

Karim El Solh, co-founder and chief ex­ec­u­tive of Abu Dhabi pri­vate eq­uity firm Gulf Cap­i­tal, wel­comed the launch of the new fund, say­ing He said there was a need for in­vestors to fund startup com­pa­nies – in­clud­ing those in the fin­tech space – that had lit­tle or no track record.

Mr El Solh said he was also eye­ing the fin­tech space for pos­si­ble in­vest­ments, but that he pre­ferred to in­vest in com­pa­nies with a proven track record rather than ones that were start­ing from scratch.

“It’s a wel­come an­nounce­ment be­cause the start-up and early stage com­pa­nies need help,” he said.

“You see a lot of pri­vate eq­uity firms look­ing to in­vest in ma­ture prof­itable com­pa­nies, but to get them to that stage they need early stage fund­ing which was lack­ing in the re­gion. I think this fund will plug that hole and aid the growth. It will jump-start the fin­tech scene in the re­gion.”

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