Bahrain launches $1bn energy fund, venture capital fund of funds

Bahrain launched a $1bn energy fund and $100m venture capital fund of funds on Thursday at an economic conference designed to attract foreign investment.

The energy fund, described as the first of its kind in the GCC, is designed to provide institutional investors in the GCC and wider world with access to local energy assets.

It will be backed by initial capital from the Bahraini government and seek to raise $1bn in initial capital from institutions in the kingdom including he Oil and Gas Holding Company, Osool Asset Management and investment bank SICO.

Officials said Bahrain Energy Fund would invest in a range of energy projects in the refining and production sectors including newly discovered oil and gas fields and others in more advanced stages.

“The fund will also provide private capital to help finance Bahrain’s major infrastructure and promote the development of bioenergy projects, which will help to position Bahrain as a regional financial centre, develop the fund and attract investment,” according to Bahrain News Agency.

The announcement follows the island kingdom’s largest hydrocarbon discovery in decades.

Oil minister Sheikh Mohammed bin Khalifa Al Khalifa said last month the field may exceed 80 billion barrels of tight oil and 10-20 trillion cubic feet of deep gas.

Read: Bahrain’s new oil discovery may exceed 80 billion barrels

Bank of America Merrill Lynch (BofAML) said in a recent report the discovery should improve the county’s fiscal dynamics in the medium term but it may have difficulty financing development costs for the project.

Read: GCC financial support to Bahrain could become conditional – BofAML

The island kingdom is rated junk by three major credit ratings agencies having been hit hard by the fall in oil prices

VC fund

Bahrain Development Bank’s Al Waha Fund of Funds will invest in venture capital funds with a presence in Bahrain.

It is designed to encourage more investment firms to establish a presence in the country and to support start-ups across the Middle East.

“We know that access to capital is one of the biggest constraints on growth for startups, so this fund will help businesses in Bahrain and across the Middle East to get access to the capital they need to expand,” said BDB chairman Khalid Al Rumaihi.

“Venture capital investment in the MENA region is a fraction of the level in markets like the USA and China – this means there are entrepreneurs with great ideas that are not realising their potential because they cannot access the funding required.”

The launch follows the opening of the country’s financial technology co-working space FinTech Bay in February and the unveiling of a regulatory sandbox last year to allow fintech firms to test their concepts.

Read: Bahrain opens fintech hub

Read: Bahrain says UK’s Tramonex, Dubai’s NOW Money sign up to fintech sandbox