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The UAE has been the top market for venture debt financing over the past few years, according to a new report.
The UAE accounts for more than 50 percent of the number of deals and financing value reported in the Middle East and North Africa (MENA) region between 2018 and 2022, asset management and investment banking firm Shuaa Capital and data platform MAGNITT said in a report on Tuesday.
During the same period, the country’s homegrown startups Tabby, TruKKer, Pure Harvest and STARZPLAY closed deals worth $275 million. The value accounts for half of reported venture debt between 2018 and 2022, and just 15% of the region’s total deal value.
Tabby’s deal was the first large venture debt deal in the MENA region and accounted for 39% of total reported venture debt financing in 2022.
Overall, the region continues to attract funding for start-ups despite global economic headwinds and uncertainties.
Venture debt totaled $260 million across 18 deals in the MENA region last year, down slightly from $266 million in 2021. The decline coincided with a contraction in venture capital investment globally, the report said.
The average deal size in 2022 also fell to $14.4 million from $26.6 million in 2021.
Natasha Hannoun, Head of Debt at Shuaa Capital, said: “Even in a global environment of high inflation and sharply rising interest rates, the MENA start-up ecosystem continues to attract international and regional investors.”
other major markets
The report also noted that Saudi Arabia was the second-largest market for funding through venture debt, accounting for 29% of total funding in the region, followed by Egypt and Jordan.
Fintechs accounted for the highest share of venture debt deals between 2018 and 2022, raising 61% of total venture debt financing over the same period.
Transportation and logistics, along with e-commerce and agriculture, remain the top sectors for investors.
(Writing by Cleofe Maceda; Editing by Daniel Luiz)
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