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Labour Fund and Venture Capital Bank launch growth engine.
Manama, Kingdom of Bahrain: The Labour Fund (LF) and Bahrain-based Venture Capital Bank has unveiled a new growth engine for small and medium enterprises in the Kingdom of Bahrain - a dedicated $ 15 million "Venture Capital Fund - Bahrain".
The move sees the Labour Fund partnering with Bahrain-based Venture Capital Bank and strategic investors to participate in a Venture Capital Fund, an investment fund to be structured and managed by Venture Capital Bank that will respond to the needs of SMEs in Bahrain who can avail of venture capital injection of between USD250,000 and USD3 million, depending on the business case in order to improve their business profitability, growth and expansion.
"The Venture Capital Fund - Bahrain", unveiled today has demonstrated the Labour Fund's keenness to 'walk the talk' as far as supporting SME growth in the Kingdom is concerned." said the Labour Fund's Acting Chief Executive Abdulellah Al Qassimi, "Experts the world over agree that SMEs are the solid foundation upon which future prosperity can be built. However, in countries like Bahrain, which are diversifying their economic base, the support structure that will assist SMEs to flourish needs to be built from scratch. This is precisely what the Labour Fund is seeking to do with the establishment of the "Venture Capital Fund - Bahrain". Having endorsed the private sector as our engine of future growth, we are now putting in place all the building blocks needed to nurture SMEs."
He continued, "The "Venture Capital Fund - Bahrain" will not just commit funds towards the growth and development of the SMEs but will also contribute their extensive expertise, contacts and advise to help mentor the SMEs. In short, they will be active stakeholders in the future prosperity of the SMEs."
Chief Executive Officer and Member of the Board of Capital Bank Mr. Abdullatif Mohammed Janahi, stressed that the key beneficiaries of the project will be "fundamentally strong undervalued, finance-seeking small to medium enterprises (SMEs) with market and revenue growth potential."
"It is our belief that by partnering with the Labour Fund in this project, we shall be opening new doors for Bahraini SMEs," he said, "Venture Capital offers SMEs the 3 Fs - freedom, focus and finance through equity participation - to revitalize their growth and leap into a higher growth cycle. Moreover, unlike the pure lending methods of funding, Venture Capital is a committed long-term and risk-sharing funding route. It is also flexible enough to shape itself to the needs of small and start-up businesses (diversification) as well as large, established companies seeking new growth. Venture capital-backed companies worldwide have been shown to grow faster than other types of companies".
"I would like to emphasize on this partnership as a vital initial step towards the right direction in connecting the development strategies and priorities of our Kingdom represented in Labor Fund's mandate and the economic return-oriented investment banking discipline offered by Venture Capital Bank. The efforts made by Venture Capital Bank and Labour Fund over the past months concluded with the establishment of this Venture Capital Fund" stated Mr. Janahi.
"The idea of establishing a private investment fund targeting investment opportunities in small and medium enterprises in Bahrain with international governance and documentation standards was always a priority to Venture Capital Bank and the time has come to take this idea from planning phase to implementation and realization through this partnership", added Mr. Janahi.
Dr. Ahmed Al Jawhary, Chief Investment Officer Venture Capital & Business Developments at Venture Capital Bank commented: "Venture Capital Bank has designed and structured the Fund based on international standards with respect to criteria for investment deployment, performance monitoring and designing systematic growth paths for target companies."
"Upon finalization of the fund structures and the line up of strategic investors, and obtaining all the necessary approvals from concerned authorities in the Kingdom of Bahrain, Venture Capital Bank shall act as the Fund Manager to carry out all operational activities pertinent to the "Venture Capital Fund - Bahrain" as well as attracting strategic investors to contribute to the Fund. The Labor Fund has contributed USD3 million to the "Venture Capital Fund - Bahrain" and the remaining balance shall be subscribed for by Venture Capital Bank and its strategic investors. Given the planned size of the equity injection per deal, it is expected that about 15 SMEs will benefit from the project in its first trench."
"The businesses that will be considered for the "Venture Capital Fund - Bahrain" will be SMEs with potential growth opportunities who can spin off diversification or divestment of an existing business; existing business expansion which represents substantial return on investment and funds injection for stimulating the venture capital philosophy in the private sector. The Fund will also work in conjunction with other providers of finance and will help SMEs to put a total funding package together for their business", added Dr. Al Jawhary.
"The total fund size of USD 15 million is committed as share capital in unquoted SMEs. Bahrain's economy has been experiencing unprecedented growth but smaller enterprises that lack a solid capital base have traditionally been neglected by institutional investors during periods of such high growth. By committing the USD15 million - as share capital in unquoted SMEs, we are confident that the Fund will help unlock the potential of the private sector in Bahrain," Al Qassimi said.