Gulf Finance Corp, a wholly owned subsidiary of Dubai’s Shuaa Capital, will offer sharia-compliant leasing products in the Saudi Arabian market after obtaining a new operating licence.
The licence will allow the firm to address a funding gap for small businesses and help to finance cross-border deals between Saudi Arabia and the United Arab Emirates, Shuaa Capital said in a statement on Tuesday.
The move is part of growing efforts to provide Islamic financing options to small businesses in the region. Last month, an investment group based in Dubai and Luxembourg launched an Islamic trade receivables financing platform catering to small businesses.
Gulf Finance Corp, which had previously been operating in Saudi Arabia as an instalment financing company under the ministry of commerce, had to commit a minimum of SAR100 million ($26.7 million) in capital to qualify for its new licence from the central bank, the statement said.
It will offer various forms of ijara financing, a common sale and lease-back contract in Islamic finance. Last week, Shuaa Capital said it would seek a stand-alone public rating for its business of lending to smaller companies, which would be the main consumer of public debt for the group.