Venture Capital Bank Receives License to Establish Saudi Investment Venture Capital Company in Saudi Arabia

22nd June 2009



Venture Capital received approval from the Capital Market Authority in the Kingdom of Saudi Arabia to establish the Saudi Venture Capital Investment Company on 16th June 2009 with a capital of SR 375 million. The new company will carry out activities of management, arrangement, consultation and handling in securities.

"The new firm is part of Venture Capital's expansion plan in Middle East and North Africa, out of the bank's firm belief in the importance of the Saudi market in the investment sector" said the Chairman of Venture Capital, Dr. Ghassan Ahmed Al Sulaiman. "It is our pleasure to be part of highly dynamic and promising financial market. We are extremely grateful to the Capital Market Authority for its valued support and great assistance in our endeavors to obtain the license" he added.

"We will endeavor to provide effective contribution not only to the investment sector but also to the economic growth Saudi Arabia currently witnessing. Through our team, we look forward to setting up the new firm and commencing its operations very soon. We would like to extend our sincere appreciation and gratitude to Venture Capital Bank's Board Members, shareholders and the founders of the new firm for their continues support, which contributed to the success of the efforts of the executive management and the working team of the bank" he said.

Board Member and CEO of Venture Capital Bank, Mr. Abdullatif Mohammed Janahi said : "SMEs are considered to be one of the major driving forces behind the growth and progress of economies globally, and Saudi Arabia is following the same trend. Today, SMEs in Saudi Arabia (accounting for 50% to 90% of the private sector) are also considered to be an important source for creating jobs, fostering technological innovation, introducing new products and services and are expected to contribute even more substantially to Saudi Arabia's manufacturing and production capacity in the near future".

Nevertheless, despite the strategic importance of SMEs, very few financial institutions and other funding sources in Saudi Arabia have focused on opportunities represented and offered by SMEs. This is mainly due to the fundamental challenges embedded in venture capital investments, scarcity of technical knowledge and resources in this field and the inability of many institutions to adjust their scope of business, objectives, and their human and technical resources to incorporate such non-traditional investment activities. Inadequate access to finance has also been a major constraint for growth of SMEs, making them vulnerable to market dynamics. With other intermediaries mainly focusing on late stage financing, there is a clear opportunity for a new player to focus on providing early expansion and bridge stage capital to SMEs in Saudi Arabia. Therefore, a venture capital player such as Saudi Venture Capital Investment Company, who is well equipped with the financial and operating expertise, as well as track record and access to medium to long-term funds, can significantly assist SMEs to overcome their deficiencies and prosper" he added.

"The establishment of a venture capital firm in Saudi Arabia, presents strong potential for value creation for the aggregate economy and the private sector through economic diversification, employment generation, improving trade terms and the creation of efficient capital markets. By helping to eliminate the inefficiencies faced by SMEs in Saudi Arabia, the venture capitalist can make this segment more competitive and enhance their economic contribution" he continued.

"From the very beginning we have engaged international management and financial and legal consultant, a detailed feasibility study and prepare the Business Plan for the company. In addition to VCBank, the shareholders base companies of a select group of institutions and businessmen from Saudi and GCC which will enable the company to achieve its goals and objectives".