Tawazun Strategic Development Fund Launches Its New Venture Debt Program For AED 700 Million
Agreements were signed with FAB, CBD, and NBF to support the funding requirements of local SMEs
Tawazun Strategic Development Fund, previously known as the Defense and Security Development Fund – the investment arm of Tawazun Economic Council – today announced the launch of the Venture Debt Program in partnership with each of the following banks, First Abu Dhabi Bank (FAB), Commercial Bank of Dubai (CBD) and National Bank of Fujairah (NBF). The Program will provide local SMEs in the defense and security sector of the UAE with financial facilitations that will support expansion of their operations and development of their capabilities
Commenting on the occasion, Abdullah Nasser Al Jaabari, Chief Officer and Head of Tawazun Strategic Development Fund said, “As the investment arm of Tawazun Economic Council, the Tawazun Strategic Development Fund stems from our firm commitment and strategic plans to meet the needs of the local industry. The signing of these agreements reaffirms our dedication to empowering industries of strategic importance and driving economic value and diversification, in line with the UAE leaderships directives. Through the newly established Venture Debt Program and these partnerships, we will have the opportunity to further support SMEs in the private sector to build industrial capabilities and innovative solutions, as well as contribute to enhancing self-reliance of the sector’s ecosystem in meeting the current and future challenges of the UAE’s strategic requirements.”
“As a start, we have an initial amount of AED 700 million allocated for the Program, which will provide Capex funding for companies setting up in the UAE. In addition, SME’s will also have access to supply chain finance for confirmed projects in the UAE, further empowering other pioneering local entities with local products, and thereby creating a more holistic manufacturing ecosystem.”
Mohamed Musabah Al Mazrouei, Associate Director for Ventures and SMEs at Tawazun Strategic Development Fund also commented saying: "The value of funding we will provide SME’s with is between AED 10 million to AED 60 million, depending on the nature of the project. We are proud of our strategic partnerships with FAB, CBD, and NBF to help facilitate financial support and loans through the Venture Debt Program. This also gives banks an opportunity to be involved in feasible projects, further contributing to the Fund’s ever-growing roster of projects. We look forward to working closely with our partners to support the private sector who act as an engine for growth in the UAE.”
The Venture Debt Program was designed to support SME’s operating in the defense and security industry, with benefits including flexible payment terms and competitive interest rates. In an effort to contribute to the UAE’s economy. Eligible companies should be at least 51% Emirati owned, with an annual turnover between AED 10 million to AED 250 million.
Companies must be engaged in value added activities that support local manufacturing, enhances local supply chains, and enables capability development by hiring qualified UAE nationals.
The Program recently completed two pilot projects of which one is them is a supply chain funding transaction which is between Al Saher International and CBD, in which Al Saher was funded with approximately AED 30 million.
Commenting on the recent transaction, Mohamed Al Mutawa, Founder and Chief Executive Officer of Al Saher, said: “There is significant potential in Tawazun Strategic Development Fund’s new agreements with local banks. The Program provides venture debt at attractive terms, supporting SMEs with financing, lower pricing and lower collateral requirement. The Fund and the Program have helped us succeed and acted as a threshold to overcome boundaries, which has allowed us to expand operations and further develop our capabilities.”
Vikas Thapar, Head of Business Banking at FAB, said: “Our partnership with the Defense & Security Development Fund by Tawazun Economic Council will help to support growth of the UAE’s SME sector in the defence and security space. The program will provide businesses with tailor-made financing solutions to enable them to gain more momentum in the market. This is part of FAB’s broader work to help SMEs expand and contribute to Abu Dhabi’s plans to boost the expansion of the non-oil economy.”
Dr. Bernd van Linder, Chief Executive Officer of Commercial Bank of Dubai, said “CBD is delighted to be a partner bank of the Tawazun Strategic Development Fund which has been created to provide support to SMEs in the Defense and Security Industry in UAE. We believe SMEs not only require financial support but also the right advice and help in areas like cash management and trade finance. CBD has been committed to helping the UAE economy for the past 50 years and we will use our extensive banking experience to work with DSDF and SMEs in this growing and dynamic sector.”
Vince Cook, CEO of National Bank of Fujairah commented: “It is our pleasure to forge such a strong partnership with the Tawazun Strategic Development Fund through the roll out of Venture Debt programs to small & medium enterprises (SMEs) operating within Defense & Security Sector in the UAE. NBF recognizes the importance of the SME sector and its massive contribution to the nation’s economy. We provide expert counseling to leverage strong opportunities for SMEs as well as offer support in overcoming any external challenges that they are faced with. We are confident in our partnership with Tawazun Economic Council and look forward to see the fruitful results of the program.”
The Program will provide Capex funding for companies setting up in the UAE such as tangible assets including machines, equipment, and facilities. Supply chain finance will also be made available for confirmed projects within the UAE for supplier payments, bank guarantees, performance bonds, letter of credit, and trust receipts.
Tawazun Strategic Development Fund, the investment arm of Tawazun Economic Council, was created to enable the UAE's strategic sectors through investments and focused developmental funding towards the private sector. The Venture Debt Program provides loans to UAE based defense and security SMEs for the expansion of their operations and development of their capabilities. The Program offers SME’s loans with low collateral and low competitive rates, with low borrower contribution