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ISTITHMAR (SME EQ​UITY)

BRIEF ABOUT THE SERVICE

The SME EQUITY financing program is the first of its kind in QATAR. It aims to support economic diversification by providing growth capital to QATARI Entrepreneurs and Deploying Investments in innovative small enterprises and high-potential medium enterprises.​​

Program object​ives:

  • Provide capital to SMEs actively owned/managed by Qataris across industries.
  • Breed innovation and encourage the formation of new ventures in Qatar to contribute to the country’s aspiration to build a knowledge-based economy.
  • Build capabilities and networks to accelerate Qatari SMEs’ accessibility to world-class standards and increase the probability of successful development.
  • Generate value-neutral returns that can be re-invested in subsequent programs.

Investment ​Strategy:​​​

  • Size: QAR 365 million
  • Target allocation: 20% in innovative small enterprises and 80% in growing medium enterprises (all Qatari-owned and with active involvement of Qataris in management).
  • Program term: 8-10 years (5 years for deployment and 3-5 years holding period).
  • Geography: Qatar
  • Industry: Sector-agnostic approach focused on supporting viable businesses with preference for strategic sectors (except construction, contracting and trade).
  • Target shareholding: Less than 50% stake
  • Equity buy-back option: With predetermined conditions for entrepreneur to buy it back from the program.
  • Ticket size: QAR 1.5 – 7 million and QAR 3.5 – 18 millions​ for innovative small enterprises and growing medium enterprises respectively, although exceptions will be reviewed on a case-by-case basis.

Moral Value and Support:​

  • Voting rights: Seat on Board of Directors, “Veto” on critical decisions such as sale of assets, company liquidation, obtaining debt and capital equity from banks and other investors and stock market listing.
  • Value generation: Close collaboration with entrepreneurs, growth plan management, transformation story, implementation of best practices and provision of contacts in a wider QDB/Qatari ecosystem.

Investment Criteria:

The investment criteria varies ​depending on the size of the enterprise and can be summarized as below:

  • For Innovative Small Enterprises:
    • Qatari-owned operational company
    • Active Qatari involvement in management
    • Growth and expansion plan from existing revenues​
    • Potential of value-added generation
    • Scalable model
    • Potential to build sustainable competitive advantage
    • Number of employees less than 250
    • Total turnover less than QAR 100 million
    • Total assets less than QAR 50 million
    • Term of operational activities less than 3 years
  • For Growing Medium Enterprises:​​​​
    • Qatari-owned operational company
    • Active Qatari involvement in management
    • Successful management track record
    • Successful financial track record
    • Growth and expansion plan
    • Value generation potential
    • Scalable model
    • Potential to build sustainable competitive advantage
    • Number of employees less than 250
    • Total turnover less than QAR 100 million
    • Total assets less than QAR 50 million
    • At least 3 years of financial statements

Key criteria for considerations:

  • Investment within priority areas: To be in one of the priority areas of investment, such as innovative business ideas and/or knowledge-based concepts with added value and potential to grow.
  • Business track record: To have a stable business model and operations, supported by existing records on business financials and operations for at least 2 years.
  • Market knowledge and experience: To have deep understanding of target market, market outlook, growth opportunities and risk mitigation plans. And to have the potential to build a sustainable competitive advantage.
  • Value creation: To have a clear case that requires investment leading to growth or incremental value.​
  • Qualified management team: To have a qualified, dedicated management team which possesses both management and technical knowledge to achieve the investment plan, with an active Qatari partner among the team*.

In addition to the above, QDB also invests in venture capital funds internationally provided that the investments:

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  • Are showing a good return potential
  • Are contributing to the development of the Qatar innovation ecosystem.
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* Applicants should note that they will go through an evaluation process by our team of experts in order to determine the feasibility of the project.

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