Ahmed Al-Jawhary

Venture Capital Bank, a startup investment bank in Bahrain, has teamed up with New York's GEM Ventures to launch a Shariah-compliant medium and small-cap private equity fund. This is the first joint venture between U.S. and Middle Eastern firms involving Shariah-compliant private equity funds, according to Eric Meyer, president of New Canaan-based Shariah Capital.

The MENA SME Buyout Fund is a 50/50 joint venture between the two firms and targets small and medium-size family and government-owned businesses in the Middle East and North Africa, according to Suneel Kaji, managing director of GEM Ventures.

While not large by U.S. private equity measures, the fund's $250 million target is a realistic starting point to deploy capital seeking to target small and medium-size enterprises, said Meyer.

Ahmed Al-Jawhary, ceo of the bank, said the fund will satisfy the region's demand for private equity and venture capital. Al-Jawhary, along with Sharif Monfaradi and Abdul-Latif Janahi will manage the fund. He was most recently director of international investment at Bahrain's International Investment Bank, where Janahi was a founding partner. Monfaradi was previously a principal of Kuwait Finance House.

Investments are expected from high net-worth individuals, family offices, institutions and ruling families in the six Gulf Cooperation Corp. (GCC) countries; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates. Shariah-compliant funds are not permitted to invest in banks and insurance companies because charging interest is curbed under Islamic law.

The fund requires a $5 million investment minimum, has a 1.75% management fee and 25% performance fee.