Derayah CEO: Solid returns generated from SpaceX partial exit, eyes new opportunities with HOF Capital

He told Argaam that the previous experience with HOF Capital strengthened Derayah’s confidence in continuing investments and seeking new opportunities in the technology and artificial intelligence (AI) sectors.

The CEO noted that the exit from SpaceX was partial, while other investments remain within the portfolio.

AlShammasi’s comments come after Derayah announced on Aug. 30 that it had entered into a binding investment commitment worth SAR 244 million ($65 million) in HOF Capital Strategic Opportunities Fund II, as part of the company’s strategy to continue investing in global technology opportunities and benefit from the investment manager’s expertise in the sector.

Investment financing

The CEO said financing the investment in the new fund does not pose a challenge for the company, noting that the amount called to date is less than SAR 100 million, while the remaining amount will be funded in accordance with the announced investment mechanism.

Derayah will finance its investment commitment through its internal resources and available bank facilities, he said, adding that the company has substantial banking facilities and their utilization rate remains very low.

AlShammasi explained that Derayah’s investment plan consists of two stages. The first involves the company’s commitment to investing in the HOF Capital fund, while the second involves establishing a new investment fund after obtaining approval from the Capital Market Authority (CMA).

Following the establishment of the new fund, Derayah’s investment in the HOF Capital fund will be transferred to it. Derayah will retain a stake in the new fund, while the remaining portion will be offered to investors whose investment strategies and objectives align with this type of investment.

Assets under management

AlShammasi said Derayah’s assets under management (AUM) exceed SAR 22 billion, stating that the SAR 244 million investment remains relatively small compared to the company’s total AUM.

The amount invested to date, approximately SAR 97.5 million, also represents a limited proportion of Derayah’s total AUM. The company views this type of investment positively amid major transformations in global markets, he added.

Investment in technology

The CEO said the massive investments flowing into AI and future technologies support Derayah’s positive outlook for the sector, driven by continued growth in global technology spending and investment.

Regarding the risks associated with investing in technology and AI companies, particularly amid elevated valuations at some companies, AlShammasi said venture capital is inherently a high-risk investment and is not considered a low-risk investment category.

At the same time, he pointed to the continued upward cycle in the technology sector as an encouraging factor, with many technology companies continuing to increase capital expenditure and invest in infrastructure and future technologies.

Experienced investment manager

AlShammasi explained that working with an experienced investment manager with extensive expertise in managing technology investments is a key pillar behind the investment decision. He noted that the investment manager's previous portfolios delivered strong results.

He added that HOF Capital manages more than $10 billion in assets, with its activities focused primarily on technology investments.

The new investment portfolio continues the same approach the investment manager adopted in its previous portfolios, the CEO said. He expressed optimism about the fund’s prospects and the expected impact of AI on the investment cycle in the coming period.

He added that Derayah hopes the new investment structure will enable it to offer an investment product suited to clients seeking access to investment opportunities in the technology and AI sectors.

Experience dating back to 2018

The CEO said Derayah has early experience in venture capital investments, having entered the field around 2018 through investments in both domestic and international markets.

He noted that over the years, the company has built an extensive network of relationships in the venture capital sector, both locally and internationally, including relationships in Silicon Valley in the US.

Maintaining multiple relationships with investment managers and specialized companies is an important factor in gaining access to the best investment opportunities, particularly in venture capital and technology markets, where access to high-quality opportunities plays a significant role, he concluded.