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Abu Dhabi, UAEThursday 21 June 2018

DIFC and MEVP agree to explore FinTech co-investments

Dubai's financial free zone established $100 million FinTech start-up fund in November

The DIFC is competing with other regional financial centres to attract FinTech talent. Kamran Jebreili / AP
The DIFC is competing with other regional financial centres to attract FinTech talent. Kamran Jebreili / AP

The Dubai International Financial Center (DIFC), the Emirate’s financial free zone, signed a memorandum of understanding with Middle East Venture Partners (MEVP), a regionally focused venture capital firm, to explore co-investment opportunities in DIFC’s $100 million FinTech fund.

The understanding, announced by the free zone on Saturday, includes the exchange information on the latest financial trends, especially within FinTech, and a commitment to work on the development of regulations to build a competitive investment environment.

“As one of the first venture capital asset managers licensed by the Dubai Financial Service Authority, MEVP Capital is an important partner for us at DIFC,” said Arif Amiri, the free zone’s chief executive.

“Increased cooperation between both parties will be key in stimulating growth and investment activity in Dubai’s venture capital sector. We are particularly excited that our MoU will also provide a platform for MEVP to explore co-investment and co-management opportunities in relation to DIFC’s $100 million FinTech fund.”

DIFC established the fund – geared towards investment in FinTech start-ups - in November, in a bid to position itself as the regional centre for the fast-growing and disruptive sector, with other financial centres in the Arabian Gulf introducing similar initiatives to attract regional and international talent.

Essa Kazim, the DIFC’s governor, said at the time that investment decisions would be made on a purely commercial basis, with no preset minimum or maximum amount of investment. He noted that some FinTech ventures may need as little as $50,000 in funding, while others could require as much as $2 million.

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The freezone’s other FinTech initiatives include its FinTech Hive incubator programme – developed in conjunction with Accenture - which launched in January 2017. The programme, which concluded its inaugural cycle in November, will hold two new programmes this year, focusing on RegTech and InsurTech, subs-segments of FinTech that focus respectively on regulatory compliance and insurance.

Abu Dhabi Global Market has launched several initiatives in the space, including its RegLab sandbox programme, and the FinTech Abu Dhabi Innovation Challenge, launched in conjunction with KPMG. Financial centres in Bahrain, Qatar and Saudi Arabia have all launched similar FinTech initiatives.

DIFC’s agreement with MEVP comes as the venture capital firm pursues discussions with prospective partners in Saudi Arabia.

Walid Hanna, MEVP’s founder and chief executive told The National in January it was in discussions with a large Saudi government institution to co-invest in start-ups in the kingdom, the Arab world’s biggest economy.

Mr Hanna said the firm also aims to team up with the kingdom’s state-owned telecoms operator Saudi Telecom Company (STC) on a deal-by-deal basis to invest in start-ups in the kingdom.