Quantic brings European institutional capital to Saudi Arabia’s SME financing market

Quantic Financial Solutions is pitching Saudi SME credit to European institutions as a diversifier against their own credit cycles. Short-duration, receivables-backed financing originated on a SAMA-regulated platform can spread institutional portfolios away from European and US credit, with short tenors, regulated origination and servicing, and loan-level transparency central to the case, Dietrich Matthes, partner, co-founder and head of alternative assets, tells EnterpriseAM. Quantic is part of the C-QUADRAT Investment Group

What drew the Vienna-based asset manager to the Kingdom is the overlap of government policy pushing SME lending and demand banks have yet to serve. “That combination — policy tailwind, regulatory maturity, and unmet demand — is not something you find simultaneously in most other emerging markets,” Matthes says. Newer companies without long financial records and businesses needing short-term working capital often don’t fit conventional bank credit models, and platforms like Lendo can assess and price those needs faster and more granularly, he tells us.

The division of labor: Quantic brings institutional capital and investment structuring, while Lendo handles origination, underwriting, SME relationships and servicing under their SAR 750 mn program, announced last month. That gives Quantic access to a regulated platform without having to build a local lending operation from scratch, and gives investors exposure to Saudi SME credit inside a framework with institutional-grade governance and reporting.

The harder part was structuring something that satisfies Saudi regulatory requirements and the governance, reporting, and risk standards European institutions expect, with Shariah compliance built in from the outset. Working with Lendo and Shariah advisers and building a transparent reporting framework is how they got there, Matthes says. Quantic is also planning Shariah-compliant products built on the underlying financing assets, aimed at Gulf and international investors for whom compliance is a requirement as well as European institutions focused on the economics. “Shariah-compliant structures no longer need to trade off institutional-grade governance for compliance,” Matthes says.

Where the money is headed: Logistics, trade and distribution as the Kingdom builds out its regional hub role, as well as healthcare services and industrial SMEs benefiting from localization and expanding domestic supply chains. These businesses often have recurring revenue but need financing to cover inventory, receivables, or other short-term operating requirements — needs that can be difficult to accommodate through traditional bank processes.

Quantic is evaluating further Saudi investments: “The Kingdom also benefits from international institutional investors who look beyond short-term market volatility to the fundamental soundness of the economy and the investment proposition,” Matthes says.

REMEMBER- The Kingdom approved the National Entrepreneurship and SME Strategy in September, outlining 13 initiatives to improve access to financing and markets, strengthen businesses’ operational capabilities and reduce the cost of doing business. The strategy aims to raise SMEs’ contribution to GDP to 35% and create more than 500k direct and indirect jobs.