erad, the Riyadh-headquartered alternative financing platform for SMEs, has partnered with Jefferies (NYSE: JEF) (with co-investment from Channel Capital) to secure $125M in a credit deal, in order to accelerate embedded finance solutions across the GCC region. After the transaction is completed, it will mark Jefferies’ first GCC asset-backed financing transaction, and “will support the firm’s plans to grow their presence in the Kingdom.”
Building on erad’s steady YoY growth and $700 million+ in funding requests, the scalable funding facility offers “expansion capacity to meet demand from SMEs in Saudi Arabia and the rest of the GCC.”
Funds allocated for Saudi SMEs will be deployed “through CMA-licensed direct financing funds managed by Erad Partners Capital.”
Salem Abu-Hammour, Co-founder of erad, said that their partnership with Jefferies represents “a transformative moment for SME financing in the region.”
They added that by embedding financing directly into “existing supplier and platform relationships, we’re making working capital as accessible as a payment transaction.”
The support from the regulators, Jefferies and Channel Capital, demonstrates the strategic “importance of alternative finance in supporting the Kingdom’s goal of SME growth.”
SMEs represent the backbone of the GCC’s economic diversification efforts, contributing approximately “50 percent of regional GDP and employing two-thirds of the workforce.”
Despite their ongoing role in driving Vision 2030 objectives and economic transformation across the Gulf states, SMEs now face a “$250 billion financing gap that limits their growth potential.”
Mark Collier, MD at Jefferies, has added that they are pleased to work with erad and the Channel team “on one of our first asset backed financing solutions in the GCC, and their partnership with erad represents a step forward in creating access to capital for GCC SMEs.”
The combination of erad’s technology platform “with their experience in asset backed financing solutions will enable erad to address the working capital needs of SMEs across the region.”
Johan Nisser, CIO at Channel, added that Channel is proud to team up with the Erad Team, Jefferies and other stakeholders “involved in this transaction, our first in KSA and a continuation of our seven years of sharia compliant asset backed finance in the GCC region.”
Nisser also mentioned that they are eager “to support the aspirations of Erad in powering businesses across the middle east region in this inaugural ABS financing.”
Following this transaction, erad is expanding into various sectors and products, including embedded finance products, enabling “suppliers and business platforms to offer integrated financing at the point of sale.”
The model is already live with several strategic partners, “including suppliers of healthcare and F&B products in Saudi Arabia and the UAE.”
The deal builds on erad’s momentum following its “$33 million debt financing round led by Stride Ventures.”
Since launch, erad has reportedly processed more than SAR 250 million in financing for regional SMEs with its 48-hour approval process “addressing the GCC’s estimated $250 billion SME credit gap.”
Founded back in 2022 by Salem Abu-Hammour, Faris Yaghmour, Abdulmalik Almeheini, and Youssef Said, erad is a financing platform that now “helps SMEs access Shariah-compliant working capital solutions.”
Using a data-driven approach, erad leverages tech in order “to offer flexible financing to businesses in Saudi Arabia and the UAE across different sectors such as retail, healthcare, F&B, and more.”
As stated in a release, Jefferies is a full-service investment banking and capital markets firm that “provides advisory, sales and trading, research and wealth and asset management services.”
With over 47 offices in 21 different countries, they aim to “offer insights and expertise to investors, companies and governments.”
Channel is a global alternative asset manager with expertise that deploys private capital across asset-based lending solutions “to the innovation economy and specialty finance sectors.”
Since 2007, their investing expertise has reportedly served “the financial return needs of clients and provided businesses with debt capital solutions.”
As of 30 Sept, Channel had appr. “$26 billion in capital invested and facilitated financing in over 35 countries.”