Gulf News - Amanat's venture capital outings is a high risk, high reward play

Vijay Valecha, Special to Gulf News 22 Oct 2020

In the last trading of the week, DFM closed higher by 0.66 per cent while ADX rose 0.05 per cent. For the week, DFM declined 0.44 per cent while ADX was marginally in the black by 0.05 per cent.

With the transformation of the economy, UAE’s stock markets are throwing up some exciting opportunities and we will discuss about one such possibility. Venture Capital (VC) is provided via various funding rounds, including early-stage seed funding.

Nonetheless, VCs, in general, are for the wealthy and have been out of reach for most retail investors. That might be about to change, with a UAE company boldly pursuing overseas investment opportunities.

Amanat Holdings with a paid-up capital of Dh2.5 billion is one of the largest healthcare and education focussed investment companies in UAE. It’s holdings include International Medical Center (IMC), a 300-bed hospital based in Saudi Arabia; Sukoon, a provider of critical care in Saudi Arabia; and the Royal Hospital for Women and Children in Bahrain.

Heavyweight assets

Amanat’s educational investments include Taaleem, a leading provider of K12 and early education in the UAE, the Abu Dhabi University and Middlesex University Dubai. It also owns the real estate assets of North London Collegiate School in Dubai.

This company with investments that are more traditional in nature is now getting into the world of VC investments. Recently, through a Series C financing round, Amanat completed the acquisition of 1.48 million shares in Conscious Content Media, known as (BEGiN), a US-based education technology company behind the early learning programme HOMER for Dh18.4 million. (Series C refers to third round of injection of capital into a startup and is often considered as late stage funding in VC parlance.)

Has the makings of a winner

Digital education is a fast-growing sector and BEGiN gives Amanat an opportunity to participate in this sector. This is Amanat’s first ever venture capital investment and the company has more than Dh1 billion at its disposal to pursue. If it uses leverage, the total equity available for investment will be even more.

At BEGiN, the other major investors are LEGO Ventures, Sesame Workshop, Gymboree Play & Music, 3One4 Capital, Trustbridge Partners and Interlock Partners, which indicates the strong investor confidence in this platform.

Amanat Holdings with a market capitalization of Dh2.14 billion has Dh505 million of cash and virtually no debt. The biggest shareholders are Invest Bank PSC, Emirates Investment Bank, and Chimera Investments.

The company, which was primarily into traditional education, now gives UAE investors a unique opportunity to play the disruptive technologies in the field of education and healthcare. It is rare to find listed GCC companies that do venture capital, which is a high risk, high return game.

The company, which was primarily into traditional education, now gives UAE investors a unique opportunity to play the disruptive technologies in the field of education and healthcare. It is rare to find listed GCC companies that do venture capital, which is a high risk, high return game.