Halal fintech Wahed lands $25m from Saudi Aramco’s venture arm

Written by Ruby Hinchliffe
10th June 2020

Wahed, a New York-based sharia-compliant investment start-up, has landed $25 million in a venture funding round led by multinational oil company Saudi Aramco’s venture fund, Wa’ed Ventures.

The fintech allows users to invest their money into a diversified portfolio made up of stocks, commodities, real estate, and sukuk (sharia-compliant bonds).

The Islamic finance industry is forecast to grow to $3.8 trillion in assets by 2022

The Islamic investment platform, which has an additional office in London, received backing from its existing investors BECO and Cue Ball Capital. It also obtained funding from Dubai Cultiv8 and Rasameel Investment Company.

Wa’ed Ventures’ managing director, Wassim Basrawi, said in a statement: “The company [Wahed] has taken the lead in delivering investment services to one of the world’s fastest growing sectors – Islamic finance.

“This latest funding round will enable Wahed to make Saudi [its] regional MENA [Middle East and North Africa] hub and contribute towards a fast-growing fintech ecosystem.”

The start-up says the funds will fuel its global expansion, particularly in building out its subsidiary in the Kingdom of Saudi Arabia (KSA).

Launched in 2017, the online robo-advisor targets Muslim investors, and ensures their assets are not invested in companies which deal in gambling, firearms, tobacco, alcohol, or pornography.

Wahed is available in the US, UK, and Malaysia

“The Muslim investor has a specific requirement that prohibits them from keeping their excess savings in bank accounts,” Wahed’s group CEO Junaid Wahedna told Forbes. “Banks utilise deposits to lend money for interest which is proven to increase inequality and cause an unfair advantage to the wealthier borrower, whilst charging a high interest fee for lower income consumers.”

The Islamic finance industry is forecast to grow to $3.8 trillion in assets by 2022, according to a 2017 ICD-Reuters report.

Islamic finance sits under the larger umbrella of ethical investments, which also serves customers which want environmentally sustainable investment options, for example.

Fellow sharia-compliant fintech Kestrl, which is set to launch in the UK later this year, is targeting all the users which fall under this umbrella, with just one sub-sector being Muslims.

Available in the US, UK, and Malaysia, Wahed claims to serve more than 100,000 customers, offering free portfolio recommendations to customers with no hidden fees.

It is also looking to expand into Muslim markets such as Indonesia, Nigeria, India and the Commonwealth of Independent States (CIS) – this includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, and Uzbekistan.

As for its immediate Saudi expansion, Wahed’s head of strategy says it “expect[s] to see outstanding results” as there “are no direct competitors and the country is ripe for disruption in line with the government’s Saudi Vision 2030 goals”.

These goals include opening up the financial services sector to emerging players, such as fintechs, to spur innovation and growth, as well as boosting the country’s financial and capital market assets.