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Wed 26 Jan 2011 12:08 PM

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Sovereign wealth funds must invest more in SMEs - Clinton

State funds should pledge a portion of capital to backing small businesses, says ex US President

Sovereign wealth funds must invest more in SMEs - Clinton
FORMER PRESIDENT: Bill Clinton was speaking at an event in Riyadh (Getty Images)

Sovereign
wealth funds in the oil-rich Gulf should pledge a portion of their capital to
support local businesses, former US President Bill Clinton has said.

Speaking
at an event in Riyadh, Clinton said small and medium-sized businesses were key
to diversifying the Gulf’s oil-dependent economies and creating jobs for its
youth.

"I
believe a lot of countries' sovereign wealth funds are set up make major big
investment. A portion of [their capital] should be set aside for small to
medium sized enterprises for new businesses and expansion,” Clinton said. “All over the world most people are employed by SMEs that
are trying to get bigger and get better.”

Saudi Arabia’s Labour Minister said Tuesday that the Gulf’s
wealthiest economy must create five million jobs for its nationals by 2030.

Unemployment in the kingdom last year was 10 percent.

One
of the challenges for the region was to allocate its petrodollars to ensure
they benefitted the poorest members of society, Clinton said.

“We need to use the resources underneath the ground to
create more opportunities for those people that are on top of it.”

Abraaj
Capital, the Middle East’s largest private equity firm, this week launched a
SR2bn ($533m) fund to invest in up to 60 small companies in Saudi Arabia.

The
firm, a joint venture with the Saudi Arabia General Investment Authority, aims
to target sectors including healthcare, education and retail.

“[SMEs
are] in desperate need of finance, whether equity or debt finance," Amr
bin Abdullah Al Dabbagh, governor of SAGIA, said.

 

M Davis 8 years ago

Bill Clinton makes absolute sense here, SME' are the backbone of most developed economies, employing in excess of 65% of the population. Banks are increasingly being squeezed out of this market and therefore the need for private or sovereign capital to support these is is increasingly important. The risk reward profile of such investment is very attractive and should represent a long term investment by all sovereign wealth funds in the long term properity and survival of their own country's economy.

Telcoguy 8 years ago

I disagree, what he says makes no sense at all from the fund perspective. The amount of time it takes to analyze a deal is fairly constant, it does not depend to a large extent on the size of the investment.
If an investment manager needs to place 1bn dollars it makes more sense to look for a few 100m or larger opportunities than trying to find hundreds of investments of a few million dollars ( how much can you invest into an SME) before you end up actually owning it?
Every couple of years some people I know come with the idea of setting up an investment fund into SMEs, none has worked so far. Cracking how to effectively serve and deal with SMEs is very difficult, and vey labor intensive on assets who can make more money way more easily by dealing with larger ventures. Large investors can only be effective with large opportunities.
So, more wishful thinking and nice talk from a highly skilled politician.