Jada deepens private credit expansion drive

Chief executive Bandr Alhomaly said the Riyadh-based fund has agreed to back India-headquartered venture debt manager Stride Ventures, marking a step in its strategy to widen access to alternative financing for companies operating in the kingdom. Under the arrangement, Stride plans to deploy about $200 million in Saudi Arabia over the next two years, targeting high-growth businesses seeking structured debt rather than traditional bank loans.

The move underscores a broader push by sovereign-backed institutions in the Gulf to cultivate domestic private credit ecosystems while diversifying away from conventional asset classes. With banks facing tighter capital requirements and global leveraged finance markets navigating higher interest rates, private lenders have gained prominence as a source of flexible funding for mid-sized firms and technology start-ups.

Jada was established by the Public Investment Fund to anchor and catalyse alternative asset managers in Saudi Arabia, with a remit spanning private equity, venture capital and private debt. It operates as a fund-of-funds platform, investing in external managers rather than directly in operating companies. The tie-up with Stride Ventures signals an emphasis on venture debt, a niche that offers loans to early-stage and growth companies, often alongside equity investors.

Alhomaly has indicated that private credit presents an opportunity to deepen capital markets and provide non-dilutive financing to entrepreneurs aligned with Vision 2030, the kingdom’s economic diversification programme. By partnering with an established venture debt specialist, Jada aims to transfer expertise and encourage international managers to establish a presence in Saudi Arabia.

Stride Ventures, founded in 2019, has built a portfolio across South Asia and the Middle East, lending to technology-driven enterprises. The firm’s planned $200 million allocation to Saudi Arabia reflects growing investor interest in the kingdom’s start-up ecosystem, which has seen increased activity in sectors such as fintech, logistics and e-commerce. Venture capital investment in Saudi Arabia has expanded over the past few years, supported by regulatory reforms and government-backed initiatives.

Private credit globally has experienced rapid growth over the past decade, with assets under management climbing into the trillions of dollars as institutional investors search for yield and diversification. However, parts of the industry have faced strain as higher borrowing costs test leveraged borrowers and some funds contend with liquidity pressures. Gulf sovereign funds, benefiting from strong hydrocarbon revenues and ample reserves, have sought to deploy capital selectively while building domestic capacity.

Other regional players have also stepped up allocations to alternative credit strategies. Mubadala Investment Company and Abu Dhabi Investment Authority have longstanding exposures to private credit managers, while Qatar Investment Authority has explored direct lending opportunities. These institutions view private debt as a complement to traditional fixed income, offering potentially higher returns and bespoke structuring.

Within Saudi Arabia, efforts to broaden the financing landscape have included the development of specialised funds and regulatory adjustments by the Capital Market Authority to facilitate alternative investment vehicles. The aim is to reduce reliance on bank lending and foster a more resilient financial system capable of supporting small and medium-sized enterprises.

Analysts note that venture debt can be particularly attractive in an environment where equity valuations are more measured than during the peak of global technology funding. For founders, debt can extend runway without immediate dilution, though it introduces repayment obligations and covenants. For lenders, returns are often enhanced by warrants or equity kickers, balancing risk and reward.

Jada’s strategy reflects a calibrated approach, focusing on managers with established track records rather than building in-house lending teams from scratch. By anchoring funds such as Stride, it can influence mandate design and encourage the localisation of investment teams. Industry participants say such partnerships are likely to include knowledge transfer and collaboration with domestic financial institutions.

Saudi Arabia has been positioning itself as a regional hub for venture capital and innovation, supported by entities including Saudi Venture Capital Company and initiatives linked to the Ministry of Investment. Increased availability of venture debt could complement equity funding rounds and contribute to the maturation of the start-up landscape.