The UAE is the most funded market for "bold debt" deals in the region
The “SHUAA Capital” platform, which specializes in asset management and investment banking at the regional level, and is listed on the Dubai Financial Market, and the “Magnet” platform approved to track venture capital investments in emerging markets, have launched the “Venture Debt Investments in the Middle East and North Africa Region for the year 2022” report. , which monitors the development of the “bold debt” financing scene in the region during the past five years, the most prominent targeted countries and sectors, financing activities, and deals.
A statement issued today defined "bold debt" as a type of debt financing obtained by startups in their early stages of growth.
This type of debt financing is usually used as a complement to equity financing, and it may sometimes be combined with guarantees on the company's shares.
The report's main data shows that financing for "daring debt" increased by 18 times between 2020 and 2021, which shows a growing appetite for financing the growth of startups.
The number of bold debt deals almost doubled between 2021 and 2022, as a result of the startup financing system beginning to recover in the wake of the Covid-19 pandemic.
According to the report, the total volume of bold debts amounted to $260 million through 18 deals in 2022, despite the difficult macroeconomic conditions globally, and the caution of bold investments, amid the prevailing uncertainty.
Despite this, the year 2022 witnessed the completion of the first huge “bold debt” financing deal in the Middle East and North Africa region, for the benefit of the emerging financial technology company “TAPI” in the UAE, as that deal alone constituted 39% of the total volume of bold debt financing in the region. 2022.
According to the report, the financing of "bold debt" in the Middle East and North Africa region was concentrated in four countries: the UAE, Saudi Arabia, Egypt and Jordan.
In turn, the UAE was distinguished as the most financing market for “bold debt” deals, by acquiring 50% of the number of deals and the value of financing announced in the region between 2018 and 2022, while Saudi Arabia ranked second, accounting for 29% of the total financing.
According to the report, the growing interest in financing bold debts over the past two years has been accompanied by an increase in the number of investors to 26 investors.
The share of international investors (from outside the MENA region) increased from 20% in 2021 to 47% in 2022.
Natasha Hannon, Head of the Debt Department at Shuaa Capital, said: “The startup ecosystem in the region continues to attract international and regional investors, despite the unfavorable international conditions in terms of high inflation and interest rates.”
She added: “As a result of these factors strongly affecting the evaluation of startups, an increasing number of entrepreneurs in the region are turning to providing alternative financing sources to obtain undiluted capital to support the growth of their businesses. Therefore, bold debt has become an important part of financing plans for startups, at a time when We expect this trend to continue in the foreseeable future.
For his part, the founder and CEO of Magnet, Philip Bahoshy, said: “The bold debt is a complementary financing tool to equity financing.
As we continue to expand the scope of the data we collect, today we are achieving a new milestone in providing accurate data and analytics in a sector that is witnessing increasing interest in the region.
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