UK investor sets up in Bahrain to tap into Gulf fintech boom

Creative Commons/Zairon

• Hambro Perks is partnering with Bahrain Development Bank fund
• Regional fintech investment up 220% to $1.67 billion in H1 2022
• Payment solutions received most funding, but regulation is a concern

Hambro Perks, an international investment firm with headquarters in London, has partnered with a fund managed by state-owned Bahrain Development Bank to set up the region’s first fintech venture studio.

HP Spring Studios will be based in the Bahraini capital Manama. Run by Hambro Perks and Bahrain’s Al Waha Fund of Funds, it aims to invest in and nurture the next generation of financial entrepreneurs across the Middle East.

Startups chosen to be part of the studio will get access to Al Waha and Hambro Perks’ local and global network of private and public institutions, including National Bank of Bahrain, Mumtalakat, and Batelco.

Together, they will help the startups scale up, generate funding and eventually exit.

• Bahrain’s Investcorp plans three Saudi deals this year
• Bahrain restructures board of wealth fund Mumtalakat
• Bahrain posts budget surplus of $88m in H1 2022

Hambro Perks has offices in Riyadh, Dubai and Abu Dhabi, and has built and invested in nearly 150 global startups.

“Al Waha was founded to help startups overcome challenges around access to funding. 

“HP Spring Studios will significantly enhance the region’s fintech ecosystem, not only empowering startups, but also helping to materially improve the way people save, send, lend, manage, and invest their money,” said Areije Al Shakar, director and fund manager at Al Waha.

The fintech sector has grown quickly in the Middle East in recent years.

The Fintech H1 2022 Emerging Venture Markets Venture Investment Report by research firm Magnitt found that in the first half of 2022 fintech was the highest funded startup sector in the Middle East, Africa, Turkey and Pakistan.

It raised $1.679 billion, an increase of 220 percent year-on-year. Payment solutions was the top subsector for investors, accounting for 42 percent of funding over the research period.

Ninety-nine percent of the investment in the Middle East and North Africa came from four countries: the UAE, Egypt, Bahrain and Saudi Arabia.

However, financial experts have raised concerns about whether the fintech sector in the region is under-regulated.

“The past few years have seen a rise in individuals taking ownership of their own finances or trying to find alternative ways to generate more wealth. But a lot of startups have entered the fintech industry that are often not regulated,” said Rupert J Connor, partner at Abacus Financial Consultants in Dubai.

“We have seen huge amounts of funding being generated by the startups, which looks to give these companies credit or great PR.

“But the question will always be there. Do we trust these platforms?

“We now have influencers, digital targeted ads, and the media pushing many platforms. But individuals must do their own due diligence and do relevant checks. Anywhere you are sending your money needs to be trusted.”

Keren Bobker, a Dubai-based independent financial adviser and senior partner at Holborn Assets, said it was early days and fintech companies were “not the answer to everything.”

“For many, this is just another money-making bandwagon and while it can be tempting to use an app on your phone for apparent convenience, this is not the best way to handle all transactions.

“While convenience is obviously useful, proper safeguards and your money being secure should be bigger considerations. 

“Many fintech companies sell themselves on cost but, as with anything in life, price isn’t everything and you will often get what you pay for.

“Technology has made many transactions cheaper but cutting corners can be about the company saving, or making, money, and not always for the benefit of the customer,” she warned.