How do debt crowdfunding platforms work in Saudi Arabia?

Muhammad Al-Omair, Managing Director and CEO of Tameed Crowdfunding Company on Debt, said that crowdfunding on debt is creating investment assets for investors and providing them with the opportunity to finance companies directly, which is a recent activity in Saudi Arabia and under the experimental environment, and the rules regulating it were recently issued.

Muhammad Al-Omair added, in an interview with Al-Arabiya, today, that “Taameed” is a platform specialized in financing small and medium-sized companies that have projects from government agencies or major private companies, and provides an opportunity for investors to finance these companies.

The Central Bank of Saudi Arabia approved the licensing of two new financial technology companies in the activity of crowdfunding with debt, which are the “Foras” company and the “Taameed” company for crowdfunding with debt, after the success of their experience through the legislative experimental environment of the Central Bank of innovative financial services and products.

For his part, Muhammad Al-Omair explained that each platform in the market specializes in a specific sector, and “Tameed” works in financing supply chains, while other companies finance various activities such as financing capital expenditures for factories.

“For example, when a company wins the supply of devices or equipment for another large company, it may face a problem in finding sufficient liquidity to supply those required devices, and then it studies “baptizing” the project and presenting it to investors in its platform to help the company in financing,” according to the founder of ” baptizing”.

Al-Omair continued: “The initial steps in providing financing are represented by “Taameed” evaluating the company requesting credit financing, with a methodology that depends on several factors, including the company’s previous experience, its previous credit behavior, the nature of the project, its complexity, the associated risks, and the study of all factors and criteria that enter into determining The cost associated with the risk to the applicant.

Regarding the average return for investors, the CEO of “Taameed” said that more than 130 million riyals were funded as projects value during the past trial period of 18 months, and the average return reached 16% on various projects, and the return increases and decreases according to the project.

Muhammad Al-Omair indicated that the offering mechanism includes presenting the opportunity, full disclosure of the risks, the nature of the project, the expected return on the investor, and providing all project data to make a decision to invest or not.

Al-Omair said that the default rate of the total investment portfolio is 0.2%.