NBK launches $300m credit vehicle with backing from Saudi sovereign fund

Dubai-based NBK Capital Partners has held a first closing of its inaugural sharia-compliant credit fund with capital from one of the region’s biggest sovereign wealth funds.

The vehicle, NBK Capital Partners Shari’ah Credit Opportunities Fund is targeting $300 million and has received an anchor investment from Saudi Arabia’s Public Investment Fund and other institutional investors including US family offices.

This is the third vintage of NBK’s credit opportunities strategy and will invest in a similar manner to its predecessors, providing flexible long-term direct lending to mid-sized firms that are unable to secure attractive financing terms from traditional lenders.

NBK Capital Partners’ senior managing director, Yaser Moustafa, said the backing of the PIF was “a clear indication of increasing investor confidence in the region’s private credit sector and its enormous potential for growth”.

The fund was developed as a sharia-compliant vehicle due to growing demand from institutional investors in the region and in Asia. Many LPs in the Middle East have typically invested in funds in North America and Europe as part of their diversification but are increasingly looking to invest within their home region to support economic growth, according to NBK.

The fund will be led by Sikander Ahmed, managing director and head of private credit and will invest in private companies in Saudi Arabia, the UAE and select adjacent markets. NBK said there is a significant funding gap for regional companies due to changing regulation and inefficient capital markets which have been exacerbated by the covid-19 pandemic.

The fund expects to make between 10 and 12 investments of $15 million to $50 million. It has a five-year investment period and an eight-year lifespan and will hold a final close before the end of 2021.