Saudi Venture Capital (SVC), a state-backed investment firm, is reshaping its $3 billion investment strategy to allocate more money to private credit funds, betting that the asset class will capture a larger share of business in the kingdom.
The firm, which primarily operates as a fund of funds, plans to allocate half of its total investments to private credit and equities combined. This represents an increase from roughly one-third of the portfolio allocation last year.
The rest of its investments will continue to support venture funding, the company told Bloomberg.
What is the reason for this change?
According to CEO Nabeel Koshak, this portfolio redesign strategy is based on “the evolution and growth of the ecosystem.” A key factor is the nascent phase of private lending in Saudi Arabia. Koshak noted that SVC intends to raise awareness of how private credit complements existing financing options by filling the SME financing gap.
Companies in Saudi Arabia, including SMEs, are increasingly turning to new sources of financing, according to Koshak, as tightening liquidity conditions make it difficult to secure traditional capital through banks.
Broader economic context and regional growth
The SVC chief was speaking ahead of Wednesday’s private equity forum in Riyadh, where the fund will gather investors and policymakers to discuss regulatory challenges and funding gaps in the market.
The increased need for diversified financing has become acute in Saudi Arabia as the kingdom tries to manage spending under Crown Prince Mohammed bin Salman’s plan to diversify the economy away from oil. This diversification aims to establish the kingdom as a center for business, finance and investment.
The focus on private credit and equity is also reflected in the broader Middle East region in the Persian Gulf, where demand for those asset classes is growing, Bloomberg reported.
Other major players are also entering the private credit space, such as the Public Investment Fund (PIF), which anchors new funds from Goldman Sachs Asset Management focused on the Persian Gulf. Venture debt is also showing signs of growth, with firms such as Stride Ventures deploying capital in the kingdom.
Recent SVC activity
Launched in 2018, SVC has a mandate to invest US$3 billion by 2030 to develop the financing ecosystem for startups and SMEs. The CEO said the firm intends to maintain its recent investment pace until 2026. It has been investing about $300 million each year.
The firm recently began focusing on private credit and venture debt with investments in Partners for Growth and Ruya Partners. It has also backed PE giants, including General Atlantic and venture capital funds such as Global Ventures, according to Bloomberg.
