e& acquires major stake in SME lending platform

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• Beehive connects SMEs in UAE and Saudi Arabia with investors
• SMEs make up around 95% of companies in UAE
• Banks reject over 40% of trade finance applications from SMEs

e& enterprise, part of UAE technology group e&, has acquired a majority stake in Beehive to tap into opportunities in the SME lending market.

Founded in 2014, Beehive leads the crowdfunding platform space in the UAE and also has operations in Saudi Arabia and Oman.

It connects creditworthy small and medium enterprises with investors and recently announced it had facilitated over AED1.5 billion worth of loans.

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Craig Moore, Beehive’s founder and CEO, said the deal “presents a huge opportunity to increase and accelerate financing to SMEs across the region”.

Financial details around the acquisition were not disclosed.

SMEs make up around 95 percent of all companies operating in the UAE. They also employ around 90 percent of the private sector and contribute more than 60 percent to the country’s GDP, according to the UAE government.

Salvador Anglada, CEO, e& enterprise, said: “SMEs are important drivers of the economy and there is a need more than ever to support their unique financing needs.”

The Asian Development Bank estimated the trade finance gap, which measures the difference between demand and supply of trade finance, at $1.7 trillion in 2020.

In the GCC a report from consultants Deloitte found that the SME credit gap currently stands at $250 billion.

In an interview with AGBI last month, Sinan Ozcan, senior executive officer of Dubai-based DP World Financial Services, said the traditional banking system has “failed” the SME sector when it comes to providing trade finance.

“That’s not because banks are evil,” he said. “The SME portfolio is historically perceived as high risk due to lack of transparency and inefficiencies in global trade. Small businesses often lack the sophisticated skills and capacity that the large corporates enjoy.”

Lucy Chow, general partner at WBAF Angel Investment Fund, said that banks reject more than 40 percent of trade finance applications from SMEs.

“More work needs to be done to address this widening trade finance gap, particularly in developing countries,” she said.