Qatar Development Bank (QDB) has launched a direct equity investment (Istithmar) scheme to support Qatari entrepreneurs as well as small and medium-sized enterprises (SMEs), a report said.

QDB also announced a QR365 million ($100.21) worth ‘SME Equity Fund’, the first product under ‘Istithmar’, designed to provide valuable investment to innovative start-up companies and SMEs, added the Peninsula Qatar report.

The initiative, a first of its kind in Qatar, will play significant role in developing private sector business opportunities in the country, said Abdulaziz bin Nasser Al Khalifa, CEO of QDB, at a press meet, it said.

The aim of the fund is to provide the capital needed for Qatari entrepreneurs or start-up owners, as well as encourage new and innovative projects that will contribute to the country’s economic diversification, generating value neutral returns that can be re-invested in subsequent funds to help and support the economy.

The QR365 million would be split into two with a target allocation of 20 per cent for innovative start-ups and 80 per cent for SMEs, although exceptions will be reviewed on a case-by-case basis, said the report.

The life term of the equity fund is eight to ten years, five years for deployment and three to five years holding period, said Mohammed Al Khater, executive director of investment at QDB.

During the investment transaction phase, the SME Equity Fund and the candidate company owners (Owners) may agree on a share repurchase option (SRO) to be included as part of the investment documentation such as the Share Purchase Agreement (SPA).

The SRO allows the owners to buy back the shares owned by the SME Equity Fund at the time of the fund’s exit at a pre-determined and agreed upon discount from the fair market value (FMV) of the company, added the report.