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Abu Dhabi Global Market issues guidance on digital securities

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In an effort to support the development of crypto assets within the financial centre, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) issued new guidelines for digital securities.

According to the statement released by the authorities, the guidelines provide clarity on initial offerings, listing, trading of tokens, and custody of other securities. Moreover, it outlines a road map for the market participants to migrate into conducting digital securities activities within the financial centre in an efficient and smooth manner.

The Financial Services Regulatory Authority (FSRA) has said that the rules published complement the guidance issued on the Crypto Assets Regulatory Framework in June last year, and the guidance on initial coin/token offerings and crypto assets published two years ago in October.

According to Ahmed Al Sayegh, the UAE Minister of State and Executive Chairman of the Abu Dhabi Global Market, it is very important to stay ahead of other countries as a nation with a progressive economy. This can be done by anticipating the impacts and developments of the global marketplace and rapidly adapting to the changing landscape of the needs of the local environment. He also highlighted the strategic role of the Abu Dhabi Global Market as an international financial centre, which has been playing its part in creating innovative business propositions and financial opportunities, benefiting the local businesses along with global partners. Moreover, he said that the guidelines published strengthen the FSRA’s position as the regulatory leader in the Digital Asset market and Abu Dhabi’s position as the financial centre of innovation.

Richard Teng, Chief Executive of the Financial Services Regulatory Authority (FSRA), said the given guidelines on matters of digital securities, aim to provide the industry players excelling at technological advancements, with the transparency and certainty they require to conduct digital asset activities in the best regulatory environment out there. He also welcomed the continued support and participation of firms looking to establish or grow their functioning within the Abu Dhabi Global Market, and also those wanting to add digital assets to the diversifying and rapidly growing capital market of Abu Dhabi.

The Abu Dhabi Global Market is making itself an attractive destination for financial technology companies and trying to promote innovation by providing an appropriate regulatory environment, required for them to operate effectively and flourish. This year, various operators of crypto asset exchanges have been granted in-principle approval by the ADGM, including Matrix Exchange, Dex Exchange, and BitOasis.

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Apps

Lebanon’s Basma, the digital dental startup secures US$1.2M Seed funding

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Author: Basma

Basma, the Beirut-based digital dental startup, secures a Seed round of US$1.2M and opens up access to simple and affordable orthodontics in the MENA region.

This financing round was led by prominent Beirut-based VC firms, B&Y Venture Partners and Cedar Mundi Ventures, with the joint participation from iSME and various business angels.

Basma is a direct-to-consumer healthcare brand that wants to give customers straighter and brighter teeth. It’s a digital health company founded on the belief that affordable dental care should be accessible to everyone. 

According to their Founder and CEO, Dr. Cherif Massoud: “7 out of 10 people in the Arab world can benefit from straighter teeth. But we think that everyone deserves to smile confidently. Aligners are the best alternative to braces, by changing the distribution channel and putting everything online, Basma cuts the treatment cost by up to 65%. Patients are constantly connected to doctors on our advanced telemedicine platform and are able to receive the treatment kit that will have a series of clear custom fitted aligners, straight to their homes.”

“Basma understands the consumer desire to improve their smile discreetly and they have the tools to make it happen.” Their CEO adds: “Adults should not feel pressured to wear wired braces. They are looking for invisible braces that don’t affect their confidence and this is exactly what we can give them.”

Bassel Attieh, Chairman and Managing Partner of Cedar Mundi Ventures, says: “We see much appetite for HealthTech and cosmetics services in the Middle East, both from consumers and professionals. And the teeth aligner industry is only getting started here. We believe in Basma’s bright future, building on local entrepreneurial and tech talents, and leveraging internationally-acclaimed remote professional initiatives for and from the region.”

The funds will further push Basma’s tech base and fuel expansion in the MENA region.

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Finance

Mena’s Fin-Tech Sector To Raise Over $2 Billion By 2022

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The healthy growth is attributed to the rapid development in the sector since 2017, in addition to the region’s commitment to technology.

Fin-tech companies in the Middle East have the potential to collectively raise venture capital of over $2 billion by 2022, according to data from the Milken Institute Centre for Financial Markets. The healthy growth is attributed to the rapid development in the sector in addition to the region’s commitment to technology. The report’s findings suggest that the regional Fin-tech sector is developing at a compounded annual growth rate of 30% which will boost the future of funding in comparison to the $80 million raised by VC firms in 2017. The boost in financing will be supported by approximately 465 Fin-Tech firms in the Middle East, including key players Dubai International Finance Centre (DIFC), Abu Dhabi Global Market (ADGM), and Bahrain Fintech Bay (BFB) which aim to fuel Fin-Tech development in the region. According to the report, the MENA region represents only %1 of Fin-tech investment globally, but mentions the region’s geographic position and demographics as a gateway linking East and West as a favourable source for the growth and development of financial technology.

The study discussed UAE’s expatriate population, which represents around 90% of its total population, and its noticeable remittances which amounted to $44.5 billion in 2017. Three fourths of which were transferred via money exchange services and the remainder transferred through banks to top countries including India, Pakistan and the Philippines. Moreover, the report explains the substantial penetration of smartphone devices and internet connectivity and the role they play in driving the region’s innovational approaches. Mobile penetration went up 100% since 2017, while smartphone penetration neared 60%, making Bahrain, the UAE and Qatar amongst the most penetrated markets in the world today.

Lastly, these developments are somewhat visible in today’s economy with DIFC’s efforts to establish a $100 million Fin-tech fund to facilitate artificial intelligence (AI), blockchain and robotics startups and ADGM’s Ghadan Ventures Fund’s contribution of $150m dedicated towards investments in tech-based startups located in Hub71. Additionally, Saudi Arabia and Kuwait will join the rest of the GCC in launching 5G networks by the end of 2019.

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Business

Dubai Expo economic activity to trigger SME insurance demand – AXA Gulf

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Growth opportunities in the SME insurance market is a result of strong initiatives by both Dubai and Abu Dhabi Governments

The insurance market for small and medium enterprises (SME) in Dubai is likely to see significant growth in the first two quarters of 2020 owing to the positive sentiment around Expo 2020 and increased economic activity, a senior insurance executive said.

Shrinking profits of SMEs have curtailed the spending power of such businesses in the past 12 to 24 months resulting in slow growth for SME insurance market, said Carol Lee, Head of Direct Sales for Retail and SME at AXA Gulf.  Speaking to Zawya on the sidelines of Smart SME MENA conference in Dubai last Wednesday, Lee said the growth opportunities in the SME insurance market is a result of strong initiatives by both Dubai and Abu Dhabi Governments.

“I am confident that by end of 2019, the increase in our UAE business will be very positive and this will further accelerate in Q1 and Q2 of next year,” she said. She added that her firm has seen its SME insurance business growing in Oman and Bahrain too this year.AXA Gulf  has created a dedicated division to address specific needs of an SME to insure its business, she said. While AXA Gulf’s SME insurance does not cover bankruptcy protection it offers consultancy and an array of bundled products suited for the small and medium-sized businesses.As financial institutions are ramping up support for SMEs in the UAE resulting in expansion of businesses and an increase in revenues, the SME insurance market, especially in Free Zones where a majority of them are registered, will see a big boost, according to the AXA Gulf executive.

While every SME would have its own unique insurance requirements, the free zone authorities, the UAE regulators and financial institutions have identified essential SME insurance cover for public liability, workmen’s compensation and employer’s liability.

Lee said as SMEs could grow from basic coverage for two or three employees to up to 250 employees, AXA Gulf has created insurance products for every stage of their growth–from immature and fragile SMEs to mature and stable ones. Referring to the risk premiums, Lee said SME insurance products are very simple and pre-underwritten, and premiums generally depend on the type of SMEs and the sector they operate in.

“As the SME insurance services are bundled in simple products and risks are pretty straightforward, we are prioritizing to digitalize our SME services in the next few months like we have done in case of auto insurance. We are working with Fintech Hive to digitalize our SME services,” she added.


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Finance

Startups discuss innovative financial ideas for accelerator programme in UAE

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Finablr has been partnering with DIFC Fintech for the past three years because they filter and choose the best startups in the region. A personal finance application that helps people understand their spending so that they can make better decisions and reach their financial goals, and the first world biometric payment network are among the innovative financial ideas for startups shortlisted for the Fintech Accelerator Programme 2019.

On Thursday, Finablr hosted 15 of the best-in-class fintech startups at its global headquarters in Abu Dhabi for a ‘Speed Dating’ event in partnership with the Dubai International Financial Centre (DIFC) Fintech Hive, the leading fintech accelerator program in the Mena region; 31 startups from across the world including start-ups from Asia, Europe, the Middle East and North Africa had been shortlisted for this year’s programme. Teams from across the Finablr Network brands interacted and collaborated with these innovative startups as the represenatives pitched their business ideas.Rahul Pai, group chief financial officer, Finablr said: “If you look at how the financial services industry is revolving, it’s becoming very specialised. This is primarily driven by newer smaller players – the startups. At Finablr have always been collaborating with startups.”

He noted that Finablr has been partnering with DIFC Fintech for the past three years because they filter and choose the best startups in the region.

“This makes perfect sense for us because we get the best startups, speak and collaborate with them, and expand their innovative products and ideas in the financial industry. This partnership is very crucial and the right kind of mix because when DIFC brings such startups to us, they get the chance to partner with a global player to further expand their business.” Pai says Finablr will mentor any number of the startups if they have good business cases related to their financial business. Over the next couple of months, Finablr teams will mentor and support selected start-ups in the next steps of their entrepreneurial journeys.

Saeeid Hejazi, founder and CEO of Wally Personal Finance Application, said: “I am excited to be presenting our product for the FinTech Accelerator Programme. Wally brings your financial life together so you can get smarter about your finances, plan easier, be more organised, and stay in sync with the people that matter. The mobile app essentially helps ordinary people in breaking down their spending tight from the transaction date and make them understand, for instance how much is going into food, entertainment and household spending. With that information, they can set their budget and control it. Wally can help people determine how much they can save after their monthly expenses have been reduced.”

He also explained that the free app by the American firm, which is soon shifting to Dubai, and can be downloaded online, was designed to be quick and efficient and can be used on a day today basis. The financial app so far has two million users.

Eazy Financial Services, a Bahrain based startup business, is the first of it kind biometric payment network facilitating transactions based on biometric. The firm offers biometric technologies and innovative solutions to the banking and financial services industries by bringing a new era of secured and convenient transaction experience. Nayef Tawfiq, MD and CEO of Eazy Financial Services, represented the firm at the Speed Dating Event, and told Khaleej Times that with their biometric payment service, the person’s finger prints is his identity and acts exactly like a card.

“With the biometric payment, you don’t need to carry cards for payments, remittance and other transactions. Your finger prints act exactly like a card,” said Tawfiq adding that since launching the service at a bank in Bahran, the service has 7,000 active users and have processed Dh25 million. He said that by the end of this year, another eight banks in Bahrain will join the biometric service and currently, the startup firm is in talks with banks in Dubai and big retailers to collaborate with them in using the service.

According to Tawfiq, through their state of the art Biometric platform, they empower clients with a unique transaction experience by enabling biometric transactions for cash withdrawals, in-store payments, in-branch customer experience, identification services, merchant loyalty programs, and others.

The FinTech Accelerator Programme offers the most innovative of startups mentoring, workshops, funding opportunities, industry insights, marketing exposure and more. During this dynamic 12-week programme, the startups can test and develop their solutions under the mentorship of leading banking and insurance institutions. During the first phase of the programme they get the chance to pitch their business to financial institution and insurance partners located in the UAE, Saudi Arabia, and Jordan.

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Finance

FinTech sector in the Middle East has the potential to raise more than $2bn by 2022

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Based on data from the Milken Institute Centre for Financial Markets, FinTech companies in the Middle East will collectively raise venture capital in excess of $2 billion (Dh 7.34bn) by 2022. Key reasons for such a healthy figure include the rapid growth of the FinTech sector in addition to the continuously increasing commitment to technology in the Gulf region.

Milken’s findings indicate that the regional FinTech sector is developing at a compounded annual growth rate (CAGR) of 30%, which will undoubtedly lead to a boost in funding, benchmarked against the $80 million raised by 30 firms in 2017. The boost in financing will be driven by approximately 465 FinTech firms in the Middle East. Within the UAE, Abu Dhabi Global Market (ADGM) and Dubai International Finance Centre (DIFC) are directing FinTech development.

According to the report “While the Mena region represents only 1 per cent of FinTech investment globally, the demographics of the region and the region’s geographic position as a ‘gateway’ linking East with West are favourable for FinTech growth and development. Platforms focused on the payments space, in particular, are big winners in the region.”

Moreover, the UAE is noticeable regarding remittances due to its expatriate population, which represents roughly 90% of the country’s total population. In 2017, expat remittances from the UAE amounted to $44.5bn, three fourths of which were transferred via money exchange companies, with the remainder transferred through banks. The top three recipient countries of these remittances were India, Pakistan and the Philippines.

Furthermore, the report went on to mention that “The substantial penetration of mobile devices and internet connectivity has partially driven this activity in the region. In the Middle East, mobile penetration topped 100 per cent in 2017, while smartphone penetration neared 60 per cent. AS of 2019, Bahrain, the UAE, and Qatar are among the most penetrated markets in the world. Saudi Arabia and Kuwait will join those three countries in launching 5G networks in 2019.

DIFC have established a $100m FinTech Fund to facilitate artificial intelligence, blockchain and robotics start-ups, whilst the $150m Ghadan Ventures Fund at ADGM is dedicated towards co-investment in technology start-ups located in Hub71.

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Finance

Bahrain Credit taps Veeam to accelerate digital transformation

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The Bahrain Credit financing company, under Bahrain Commercial Facilities Company (BCFC), has tapped Veeam Software has announced to guarantee data Availability, improve operational efficiency and better deliver digital services to its customers.

The organisation has opted for the Veeam Backup & Replication to gain greater visibility of their data and can reduce the cost and time spent manually managing and storing data.

Bahrain Credit prides itself on being the first choice for customers by providing excellent products, services and solutions and relies on data Availability for its continued success.

The organisation’s Bahrain Credit’s priority has been the digitization of its services to extend greater conveniences to its customers, while catering to Bahrain’s growing demographic of young, tech-savvy digital natives. Getting to know its customers would be central to its strategy of engaging millennials. Therefore, data would be the nerve-center of its new paradigm.

“Financial services digitization is our key to provide a differentiated customer experience that suits the new lifestyles changes,” said Ali Al Marzooq, Head of Innovation and Business Technology of Bahrain Credit. “With unique digital services on-boarding, we aim to simplify the process to help our customers save their time and effort. We’re building omni-channel engagement for our customers through web portals, mobile apps and self-service kiosks, so their entire customer journey can be managed online.”

Veeam’s scalable backup and replication capabilities accelerates business performance, providing an easier and more efficient way for the Bahrain Credit in-house team to manage scalable workloads. Veeam Backup & Replication takes care of the backup and recovery of several mission-critical virtual machines (VM), including the VM running Bahrain Credit’s core database, which stores all customer data and serves all its enterprise applications. By enabling the group’s Digital Transformation strategy, Veeam has radically enhanced efficiencies across multiple areas of Bahrain Credit’s business.

With huge amount of its data existing solely in digital formats and a single hour of downtime costing a significant amount of money, Bahrain Credit attributes the ability to now smoothly run key operations, guarantee business performance and meet its customers’ needs to Veeam.

Veeam has also given Bahrain Credit the confidence to digitise its mission-critical records, allowing customer records to now be instantly available across all branches, speeding up workflows. This has cut the processing time for new service applications.

Bahrain Credit is now set to partner with Veeam in a cloud migration project designed to be the first step in an ongoing Digital Transformation journey for the company. The programme will also integrate Veeam’s replication solution for disaster recovery and a system for the archiving of emails for off-boarded employees to promote greater service continuity for customers.

“The cloud will enable us to meet our goal of not having any physical servers by 2020 and we see Veeam as being a key partner in achieving this objective,” said Al Marzooq.

“We pride ourselves in delivering effective, easy-to-use services to our clients. Our reliable and robust backup and recovery technology gives customers the confidence to proactively manage their data, drive digital services to market faster and deliver highest value and save them both time and money,” said Claude Schuck, regional manager, Middle East, Veeam.

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Finance

Tell Group aims to facilitate Lebanon’s infrastructure with $100 million fund

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Private equity firm Tell Group, has closed its first Lebanon infrastructure fund according to Reuters. The company hopes to raise $100 million worth of funds. The fund known as the Tell Lebanon Infrastructure Fund is the first Lebanese fund targeting infrastructure opportunities in Lebanon specifically.

Sethu Palaniappan, the CEO of Tell’s asset management division commented on the importance of the fund, saying “this is a first of its kind private equity infrastructure fund dedicated to Lebanon.” Currently, the group is focusing on raising funds worth $1 billion for the infrastructure development of Lebanon. However, the group has not yet revealed the amount that has been invested.

Apart from the fund, foreign governments and donors have also shown concern about the crippling infrastructure of Lebanon. To improve the conditions, they pledged an amount of 11 billion dollars last year in Paris on the condition that the reforms will be carried out by the Lebanese government itself. The amount will be used for Lebanon’s 12-year infrastructure investment program.

The work by Tell fund has already started and initially it has identified 5 to 6 sectors that need to be revamped, which include energy, telecommunications and waste management. In the later stages, it plans to focus on sectors such as tourism, water, solid waste, transport and electricity.

According to the group, institutions and governments from around the globe have committed to the fund. These include more than 25 family offices, individuals and institutions from Lebanon, Europe, and the Gulf Cooperation Council.

Beirut has decided to follow suit after struggling to improve its slow growth and a weak infrastructure of the city. It has announced a capital investment program worth $20 billion that will focus on more than 280 projects around the city.

Tell Group was founded in 2015 and is a team of financial industry experts with a shared vision developed through many years of common experience and collaboration. The group focuses on the clients by extracting value from market trends and is regulated by DFSA in Dubai, Switzerland’s FINMA and Algeria’s COSOB and chaired by Swiss-Algerian Yassine Bouhara. Back in June, the group also proposed to buy 7 funds that were formerly managed by Abraaj Group for $25 million.

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Blockchain

Jibrel to Launch Globally Regulated Blockchain-Powered Private Financing Platform

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Jibrel Network, a blockchain-based fintech company headquartered in Zug, Switzerland, announced today that it will be launching Jibrel.com — a fully regulated blockchain-powered private financing platform — after its recent acceptance into the new ADGM (Abu Dhabi Global Market) RegLab cohort in the UAE. In the words of Yazan Barghuthi, Jibrel’s co-founder and CEO, “We are excited to be launching a vertically integrated private lending platform that will take startups from inception to maturity. The platform will increase investor transparency, simplify regulatory oversight and improve liquidity — by providing a streamlined platform to buy, sell and transact startup equity.” 

As a company, Jibrel’s purpose is to foster open financial systems and digitization powered by emerging technologies. Its mission is to tokenize an array of assets (including debt such as bonds and Sukuk, as well as programmable tokenized equities and real estate) in a manner that is borderless, asset class agnostic and customizable for different use cases. “Jibrel was founded with the aim of tokenizing traditional financial assets,” says Barghuthi. “In collaboration with ADGM, we successfully settled the first Digital Sukuk with Al Hilal Bank and since then have further explored, researched and developed technologies that can assist in retail debt issuance. Now we have set our sights on tokenizing traditional equity. “

This is the basic premise behind the company’s upcoming launch of Jibrel.com — a native blockchain-powered private funding platform — that will enable investors of all genres to connect with startups and SMEs, creating new capital formations. As Talal Tabbaa, co-founder and COO of Jibrel, says, “We at Jibrel will collaborate on the technological, regulatory and financial spheres to bring real world equity on-chain, thus redefining how companies are established, funded and managed — and ultimately transforming the global capital markets in the process.”

Private financing platforms are set to completely change with the utilization of blockchain technology. Private financing has skyrocketed in popularity over the past decade or so. There are more than 375 private financing platforms to date. In North America alone, private financing volume totaled $17.2 billion in 2017. Globally, the industry is expected to hit $300 billion by 2025, with over $34 billion raised to date. 

With the integration of blockchain technology, private financing platforms are expected to change for the better and thus grow. Tabbaa further explains: “We believe that the digital economies and financial markets of the future will be built on digital assets, including tokenized equities and securities. Blockchain platforms will work as enablers, democratizing investment securely, transparently and efficiently in regulated environments.” 

Barghuthi sees ADGM as particularly well positioned to provide regulatory support for Jibrel’s private financing project: “With ADGM, we’ve found a forward-thinking, fast-moving regulator that provides the proper framework to facilitate the seamless transaction of equity tokens, furnishing equity with the efficiency and simplicity of Bitcoin and other related digital assets.”

Private financing presents a major growth opportunity in MENA. With the UAE and other Middle Eastern countries seeking to diversify their oil-based economies, young and tech-savvy entrepreneurs are starting new and successful businesses and are obtaining investor backing. As Tabbaa believes, “Jibrel.com will transform the MENA startup ecosystem by providing access to a broader investment base — including individuals, VC funds and institutional investors. By accessing a bigger investment pool, these startups will raise more liquidity, and spur the growth of this sector further in the region.”

As for the future, Tabbaa states, “We are just at the beginning. Once we have launched a regulated blockchain-powered private financing platform, we then hope to develop an alternative investment platform for new asset classes. Further down the road we will integrate these with an alternative trading system to facilitate secondary trading of private tokenized equities. Our aspiration is to bring greater transparency and democratization to how private equity (PE) and venture capital (VC) fund managers raise capital, and in so doing, ultimately usher the fund and investment management sector into a new era.”

As part of its efforts towards developing a fully regulated blockchain-powered equity financing platform, Jibrel has enlisted Eversheds Sutherland as an advisor. Eversheds Sutherland is one of the most internationally renowned legal advisory groups in the global financial sector.

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Ecosystem of the MENA

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