Riyadh-headquartered alternative financing platform erad has secured a $125million credit facility to accelerate embedded finance solutions for small and medium-sized enterprises (SMEs) across the Gulf Cooperation Council (GCC). The deal was led by global investment banking firm Jefferies, with co-investment from Channel Capital.
Once finalised, the transaction will mark Jefferies’ first asset-backed financing transaction in the GCC, signaling growing international institutional interest in the region’s fintech ecosystem. The facility is designed to support erad’s expansion plans within the Kingdom of Saudi Arabia and the wider region, where demand for alternative financing is surging.
Closing the $250billion financing gap
SMEs are increasingly viewed as the backbone of economic diversification efforts in the Gulf. According to data cited by erad, these businesses contribute approximately 50 per cent of regional GDP and employ two-thirds of the workforce. However, despite their critical role in driving economic transformation objectives, such as Saudi Arabia’s Vision 2030, SMEs in the region face a significant financing gap estimated at $250billion, which severely limits their growth potential.
erad aims to bridge this gap by providing a technology-driven alternative to traditional banking. Building on a strong performance that has seen 6x year-over-year growth and over $700million in funding requests, the new scalable facility offers significant capacity to meet the liquidity needs of businesses in the region.
Salem Abu-Hammour, co-founder of erad, commented: “Our partnership with Jefferies represents a transformative moment for SME financing in the region. By embedding financing directly into existing supplier and platform relationships, we’re making working capital as accessible as a payment transaction. The support from the regulators, Jefferies and Channel Capital, demonstrates the strategic importance of alternative finance in supporting the Kingdom’s goal of SME growth.”
Expanding into B2B and new sectors
Historically focused on consumer sectors, the new capital will allow erad to expand its reach into manufacturing, logistics, distribution, and real estate services. The platform is now offering ticket sizes of up to SAR 10million.
A key part of this expansion is the launch of a new embedded finance solution for B2B businesses. This product enables suppliers and business platforms to offer integrated financing at the point of sale, removing friction from the purchasing process. The model is reportedly already live with several strategic partners, including suppliers of healthcare and food and beverage products in Saudi Arabia and the UAE.
The involvement of Jefferies and Channel Capital highlights the maturing appeal of the Saudi fintech market to global investors.
Mark Collier, managing director at Jefferies, said: “We are proud to work with erad and the Channel team on one of our first asset backed financing solutions in the GCC, and our partnership with erad represents a significant step forward in creating seamless access to capital for GCC SMEs which we think erad are uniquely well positioned to provide.”
Johan Nisser, CIO at Channel, added: “Channel is proud to team up with the Erad Team, Jefferies and other stakeholders involved in this transaction, our first in KSA and a continuation of our seven years of sharia compliant asset backed finance in the GCC region.”
The deal builds on strong momentum for erad, following a recent $33million debt financing round led by Stride Ventures. Since its launch in 2022, the company has processed over SAR 250million in financing for regional SMEs. Funds allocated for Saudi SMEs will be deployed through CMA-licensed direct financing funds managed by Erad Partners Capital.