Israel’s Liquidity Group to support Gulf startups with $500m

Gavin Gibbon

March 6, 2023 12:00 PM

  • Liquidity Group aims to invest $6bn across the world this year
  • 10 percent of its capital is currently invested in Middle East
  • Business is looking at an IPO in next 18-24 months

Liquidity Group, an Israel-based fintech and asset manager, is looking to provide $500 million this year to support startups in the UAE and across the Middle East.

The company reached unicorn status last month, with fresh investment of $40 million from Japan’s MUFG at a valuation of $1.4 billion.

Launched in 2018, Liquidity Group provides loans to mid-market, late-stage companies by automating the entire debt lending cycle.

Meitav Dash Investments and US venture capital fund Spark Capital are also partners in the business.

It currently manages $4 billion in seven different funds across the world – five debt funds and one equity fund – and has experienced 600 percent year-on-year growth.

Founder and CEO Ron Daniel told AGBI the company deployed $2.5 billion last year with plans to increase that to $6 billion in 2023 and up to as much as $20 billion annually “four years from now.”

“Our goal is to provide seamless funding solutions to businesses, backed by a team of experienced entrepreneurs and professionals, along with data scientists, machine learning, legal and analytical experts, who are paving the way for a new era of tech investment,” Daniel said.

“In terms of the capital deployed in the Middle East, now it’s about 10 percent and it’s probably going to grow over time to 25 – 30 percent.”

Liquidity Group, which has offices in New York, London, Tel Aviv and Singapore, signed a deal in November last year to establish a research and development centre in Abu Dhabi, becoming the first Israeli company to join the $545 million Abu Dhabi Investment Office’s (Adio) Innovation Programme.

Daniel explained that the technology developed is able to predict with 94 percent accuracy the cash flow and revenue stream of mid-market borrowing companies within a two-year horizon.

“We are at zero default rate for five years,” he said.

The Abu Dhabi office employs 40 developers from 12 different countries, although expansion plans include increasing this to 100 by the end of the year.

Following the signing of the Abraham Accords in September 2020, Adio opened an office in Tel Aviv to support Israeli companies looking to establish and expand their operations in the UAE capital.

“As the relationship between the UAE and Israel continues to evolve, particularly in the technology sector, we believe that Liquidity Group’s expertise and experience will play a key role in facilitating innovation and growth in both countries,” Dhaher bin Dhaher Al Mheiri, CEO of ADGM Authority, said.

Although the historic agreement currently only involves Israel, the UAE and Bahrain from the GCC, Oman last month said all airlines can overfly its territory, joining neighbouring Saudi Arabia in providing a corridor for the national carriers of Israel.

Daniel said it may take “another few years,” but he is confident all countries in the region will work together openly.

“I’m a strong believer that the Emirates and Israel relationship is the beginning of an era where the whole of the Middle East will consolidate into the most significant commercial power in the world,” Daniel said.

“When you look at places like Riyadh, Abu Dhabi, Dubai and Doha, they’ve all the infrastructure and the governance to be the centre of where technology companies scale their business.

“It’s very hard to scale businesses in places like San Francisco, New York, Tel Aviv and London. It’s very hard to import talent from all over the world. It’s very hard to get working visas, very hard tax-wise, very hard regulation-wise.

“This region generates a very unique platform, which I think Abu Dhabi is leading, but others are not far behind.”

Nearly $3 billion in bilateral trade between the UAE and Israel was recorded last year, a figure which does not include much of the Israeli-related business carried out in the UAE with third parties such as representative offices in Dubai that lead to direct trade between Israel and Asia, the subcontinent and the greater Middle East.

“We continue to see positive developments, which the UAE-Israel Business Council believes will result in trade of approximately $5 billion in 2025,” Dorian Barak, co-founder of the UAE-Israel Business Council, said.

Daniel said Liquidity Group would be looking at an IPO in the next 18-24 months and did not rule out the listing taking place in the Middle East.

“It’s too early to say. We’re exploring the opportunities. We like the region but we also like Nasdaq and we like Japan so we’re still considering it,” he said.