In a compelling conversation with Jessica Wong, founder and managing partner at eWTP Arabia Capital, we explore the groundbreaking developments surrounding Valuable Capital Financial Company's (VCFC) recent acquisition of the final license from the Saudi Capital Market Authority (CMA).
This milestone not only signifies a transformative shift in Saudi Arabia's financial sector but also marks VCFC as the first international fintech firm to secure such a license, positioning it as a pioneer in the kingdom's financial landscape.
Wong sheds light on the broader implications, benefits for Saudi investors, and the strategic role of eWTPA in fostering connections between China, Hong Kong, and the Middle East.
Q: Can you explain the significance of Valuable Capital Financial Company (VCFC) receiving the final license from the Saudi CMA?
A: The acquisition of the final license by Valuable Capital Financial Company (VCFC) from the Saudi Capital Market Authority (CMA) is a significant milestone in the transformation of Saudi Arabia's financial sector. As the first international fintech firm to secure this license, VCFC's entry into the Saudi market marks a pivotal advancement in the internationalization of the kingdom's financial arena.
This accomplishment is aligned with the objectives of the Financial Sector Development Program (FSDP), which is aimed at cultivating a resilient and diversified financial sector that not only bolsters economic growth, but also ignites private sector development.
Furthermore, this event serves as a breakthrough in Saudi Arabia's global outreach in the financial market. It not only enhances the country's appeal to global financial investors but also fosters the diversification of the financial sector. VCFC's entry may inspire more international fintech companies to explore opportunities in Saudi Arabia, thereby contributing to the nation's economic diversification objectives under Vision 2030.
With VCFC's presence and innovative financial services, the growth of the private sector is expected to be further stimulated, thus actively contributing to the realization of Saudi Vision 2030.
Q: How does VCFC's licensing approval from the Capital Market Authority of Saudi Arabia (CMA) benefit investors in Saudi Arabia?
A: VCFC was established in February 2022 through a 50/50 joint venture between eWTPA and Valuable Capital Group Ltd (VCG), a technology-driven provider of financial solutions that serves millions of retail investors and over 500 institutional investors and corporate clients worldwide.
With the launch of this pioneering investment platform, VCFC is poised to lead the way in the Kingdom's trading landscape. Once VCFC introduces its new product into the market, Saudi retail investors will gain access to a more user-friendly digital platform for investing in China, Hong Kong, Malaysia, Singapore, and various other global markets.
Going forward, the platform will feature an expanded range of products, including ETFs and bonds that will further broaden the investment options. The seamless interconnectivity of markets will enable the introduction of diverse products from other markets, alongside customized offerings tailored for the local market. This multifaceted approach, informed by a deeper understanding of various markets, will facilitate IPOs in both the local and international arenas.
This expansion is further underscored by the deepening collaboration among the capital markets of Saudi Arabia, China, and Hong Kong SAR. In September, the Tadawul Group and the Shanghai Stock Exchange solidified their commitment to collaboration, encompassing dual-listings, financial technology advancement, environmental, social, and governance (ESG) initiatives, and data exchange. Earlier in the year, the Tadawul Group and the Hong Kong Exchanges and Clearing Limited (HKEX) announced Tadawul's recognition as a Recognized Stock Exchange (RSE).
This designation permits companies primarily listed on the Saudi Exchange's Main Market to pursue secondary listings in Hong Kong, further enhancing the market's international reach and accessibility.
Valuable Capital Group Ltd (VCG), headquartered in Hong Kong SAR, operates across Mainland China, Hong Kong SAR, Malaysia, Singapore, New Zealand, and the United States. In addition to eWTPA, VCG enjoys strong support from strategic investors of repute, including Sina Group, the controlling shareholder of Weibo, often referred to as the "Twitter of China."
Q: How does eWTPA support and bridge the gap between China, Hong Kong SAR and the Middle East?
A: eWTPA is a growth-stage venture capital fund with offices in Hong Kong SAR, China, and Saudi Arabia, that offers support to enterprises such as VCFC. We go beyond providing financial backing by offering invaluable knowledge and expertise to assist companies in efficiently addressing regulatory requirements, connecting them with pertinent partners, and guiding them through the complexities of the local business landscape. Our aim is to help them establish a flourishing digital ecosystem within the MENA region.
We have enabled over 100 Chinese tech giants to enter the MENA market through a private equity model or strategic buyout approach. Our mission is to guide companies toward maturity, with the ultimate goal of contributing to the emergence of the next Unicorn in the region. This vision hinges on the convergence of startups, innovators, and SMEs, as it is within this synergy that unicorns have the potential to arise.
Earlier this year, eWTPA also inaugurated the Saudi-China Entrepreneur Association (SCEA), a collective comprising more than 100 businesses from both China and Saudi Arabia, in addition to government entities, NGOs, and academic institutions. The SCEA is dedicated to fortifying economic connections between these two regions and fostering cross-border investments and collaborative initiatives.
Q: What makes the MENA region so attractive to investors and entrepreneurs from China?
A: eWTPA's fundamental investment strategy revolves around transferring cutting-edge technology and proven business models from China and the broader Asia region to address any gaps in the MENA market. For eWTPA, success is measured by its capacity to drive capital appreciation and contribute to the advancement of the digital ecosystem in the MENA region.
The MENA markets acknowledge the pivotal role of the venture capital sector in enhancing economic value. Moreover, the MENA region boasts a significant share of the world's population with approximately 7.5 percent of the global total, a majority of whom are young individuals. Of the 600 million people residing in the region, over 50 percent are under 25 years of age. This demographic profile creates an ideal customer base receptive to disruptive business models and fosters a burgeoning culture of entrepreneurship. It is further supported by increased spending capacity, widespread internet access, and forward-thinking government initiatives.
Traditionally, the MENA region leverages its strategic geographical location, serving as a gateway to both Africa and Asia. The proximity of Dubai, with one-third of the world's population reachable within a four-hour flight, makes the region exceptionally appealing to startups seeking to tap into these vast emerging markets.
Lastly, geopolitically, China and the Middle East maintain a harmonious and cooperative relationship, offering mutual political and economic complementarity. The bilateral trade and economic cooperation between these two regions continue to experience substantial growth, further enhancing the prospects for collaborative ventures.
Q: What strategic advantages does eWTPA bring to the Saudi Arabian market? What are some of the companies that have benefited from your presence in the region?
A: eWTPA is backed by PIF, the sovereign wealth fund of Saudi Arabia and eWTP Capital (Alibaba Group and Ant Finance Group). Though it was started only in 2019, eWTPA has invested in 18 companies in the digital sector, 13 of which have already established themselves successfully in the region.
Investments include the hugely successful Saudi Cloud Computing Company, the leading provider of cloud services in KSA, and J&T Express, which is now the fastest growing logistics provider in the country. VCFC is also one such success story that will soon offer a unique product to KSA that will set it apart from others in the market.
Through our years of experience, we've come to recognize that the most effective model in the MENA region is what we refer to as a "local-Chinese hybrid model." This model necessitates investments and collaboration with both local and international technical partners to implement technologies originating from China. Our commitment to forming partnerships with local stakeholders remains unwavering, as we depend on their in-depth knowledge of the region to grasp the evolving demands. We strategically harness the capabilities of local players, including resellers, marketers, administrators and various governance structures, to establish this model.
Its effectiveness is underscored by our consistent track record of achievements. Chinese technology and expertise, particularly in established business models, technologies, applications, and products, offer distinct competitive advantages. This is especially relevant as domestic growth rates plateau, and enterprises increasingly look toward international expansion opportunities.
