Gulf Finance Corporation (GFC), the wholly-owned SME financing subsidiary of Dubai-based financial services firm Shuaa Capital, said that it has closed a Dhs500 million senior secured term loan facility.
The 42‑month facility, which includes an unfunded Dhs50 million Standby Letter of Credit, is one of the largest syndications to take place in the UAE during the last 12 months.
GFC will deploy the facility to further penetrate the SME finance market in the UAE and Saudi Arabia, the company said in a statement.
The loan facility is also expected to improve SHUAA’s overall business performance and the group’s funding and cost structure.
Abu Dhabi Commercial Bank (ADCB) was the initial mandated lead arranger and bookrunner on the syndication. National Bank of Oman acted as mandated lead arranger while United Arab Bank was lead arranger. National Bank of Fujairah, Blom Bank France and Bank of Baroda acted as arrangers.
“The Dhs500 million facility provides a stable long term source of funding for Gulf Finance to meet its objectives of providing growth finance for entrepreneurs and small and micro businesses,” said Sheikh Maktoum Hasher Al Maktoum, executive chairman of SHUAA Capital and chairman of GFC.
“It reflects the improved financial position of GFC and the SHUAA Group overall. This is an important milestone for Gulf Finance’s future expansion and the overall earnings power of the group.”
SME funding has been historically low in the MENA region, with lenders shying away from the potential risks that arise when dealing with smaller firms.
According to the International Finance Corporation (IFC), the SME funding gap in the MENA region stands at approximately $260 billion.
A recent World Bank study similarly found that the share of loans given to SMEs in the MENA region was the lowest in the world at an average of 7.6 per cent of total bank loans. The ratio was found to be particularly low in the GCC, at two per cent, compared to 13 per cent in the non-GCC MENA region.
But the gap is slowly being bridged as new players enter the market.
Last year, former Emirates NBD CEO Rick Pudner launched Beehive, a new peer-to-peer online funding platform for SMEs in the region. The platform aims to directly connect the SMEs with investors, ensuring faster access for those seeking loans.