The right chemistry



When you have a hand in approving start-up loans to a wide swathe of Saudi industry, you develop a unique perspective on the pulse of the nation's economy.

As we emerge from the ravages of COVID-19, I am heartened to observe from our loan business the organic growth of the Saudi domestic chemicals industry -- the result of a national strategy to reduce reliance on foreign imports and diversify the Kingdom's economy.

Helping Saudi Arabia develop a broader, more diverse economy less dependent on the energy sector is also a key goal of Wa'ed, the entrepreneurship arm of Aramco. For a decade now since Wa'ed's founding in 2011, we have lent more than $45 million to Saudi start-ups, many of which are involved in industrial manufacturing and chemicals.

A big reason many clients come to Wa'ed is because we are the Kingdom's only non-collateral lender to start-ups, which is a major benefit for many enterpreneurs, who have brilliant ideas and business strategies, but rarely capital of their own.


 



Mazen Al Asnag is the head of Wa'ed's loan finance group

To be sure, with SABIC, the Kingdom already has the largest chemicals producer in the Middle East, and one of the largest in the world. SABIC is actively supporting the growth of a domestic Saudi speciality chemicals sector by selling its basic chemicals in small quantities to Saudi entrepreneurs, who turn it into speciality, high-end chemicals.
 
By nurturing the growth of Saudi's new downstream chemicals industry, SABIC, Wa'ed and other members of the ecosystem such as the Saudi Industrial Development Fund are helping the Kingdom build a future based on high-value production.

Increasingly, entrepreneurs are coming to Wa'ed for industrial loans to start businesses in speciality chemicals, a good sign for jobs and economic growth.

 

Just last week, Wa'ed approved a 3.7 million SAR loan to SICCO, a start-up in the Eastern Province that will be the Kingdom's first producer of calcium bromide. The substance, used to regulate wellbore pressure, is normally shipped in from China and other foreign suppliers.

Starting in 2022, SICCO, whose full name is Specialty Industrial Chemical Co., will produce up to 4,000 tons of the white, odorless powder.

SICCO is just the latest example of a Saudi chemicals start-up whose future is being financed and enabled by Wa'ed. We currently have 10 chemicals companies in our portfolio of 70 receiving Wa'ed loans. Measured in dollars, chemical makers represents about 10 percent of our total outstanding loan portfolio. This percentage is certain to grow.


 
The factory floor at Gulf Horizon, a Dammam maker of industrial coatings.

The trend is already strong. In the last year, we have completed loan agreements with companies such as Beta United, which plans to make the Kingdom's first medical-grade ethanol, for use in sanitation and medical applications.

We also made a loan to Gulf Horizon Factory of Dammam, a maker of industrial coatings used to prevent the corrosion of oil pipelines. Innivate Industrial Chemicals, a maker of industrial resins, and Amad Chemicals Company, a maker of solvents for the marine industry, are also Wa'ed loan portfolio companies. In each case, Wa'ed has helped these entrepreneurs either build their factories or buy equipment.

Together with our partner SIDF,  Wa'ed and SABIC are helping drive the growth of Saudi's specialty chemicals sector.