Qatar’s QDB to launch debt-to-equity seed fund

Qatar Development Bank (QDB) plans to launch a debt-to-equity seed funding initiative for entrepreneurs, its CEO said on Tuesday.

The fund – the size of which has yet to be confirmed – is expected to launch by the end of this year, according to QDB’s Abdulaziz bin Nasser Al Khalifa.

Entrepreneurs and small-to-medium-sized enterprises (SMEs) will be able to gain access to convertible notes with a ticket size of up to QR1 million each ($274,000).

A convertible note is short-term debt that converts into equity. In the context of seed financing, the debt typically converts automatically into shares following a first round of financing.

In an interview in Doha on Tuesday, Al Khalifa told Arabian Business that access to finance remains one of the biggest barriers to SMEs’ growth in the region, particularly in economically uncertain times when banks are cautious of lending.

He said QDB had identified a need for a fresh seed capital initiative in the Gulf state, which is working hard to encourage entrepreneurship amid low oil prices.

Last year, the bank launched its dedicated SME Equity Fund, worth QR365 million in total and making ticket sizes of between QR1.5-QR7 million and QR3.5 million- QR18 million available for small enterprises and medium-sized growth businesses respectively.

Al Khalifa said around 5 percent of the five-year fund had been released to date.

He also revealed that QDB had witnessed rising demand for loans over the past year. Loan provision to SMEs totalled QR1.384 billion by the end of 2015, according to Al Khalifa, while the 2016 figure as of October stood at QR1.26 billion, meaning QDB is on track to record 20 percent year-on-year growth in loan provision by the end of the year.