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KSA investors target $100 million fund at startups

Digital Technology Company (Digitel) aims for a 30% return on investments in pre-IPO companies here and in North America.

Four KSA citizens have come together to form Digital Technology Co. (Digitel), a $100 million investment fund that will seek out New Economy investment opportunities in the Middle East and North America.

The partners, two of whom are IT experts and two of whom are financial services gurus, are seeking to invest in pre-IPO companies and say they will be open minded about the types of companies they back.

One of their ideas is to localise and Arabise dot.com business models or even franchises that have proven successful internationally. They don't see the relative backwardness of the region's Internet infrastructure as a dampener on their plans, but as an investment opportunity.

"We agree there is quite a bit of an evolution that has to take place for e-commerce and the Internet to reach a reasonable degree of maturity, but we see that as a business opportunity for ourselves," executive partner Ahmad Al-Sari told itp.net. "Security on the Internet is a major element that has to be there, but that's also an opportunity for investment on our part. The same thing applies to payment."

Business to business (B2B) e-commerce is also seen as a bright area of opportunity. The partners believe that the Middle East's companies will have to move towards online procurement in order to remain competitive.

"B2C is a lucrative market, but in terms of numbers, transactions and volume, B2B is definitely it," says executive partner Abdulaziz Jazzar. "The whole world is going 'e' and therefore the dealers and major merchants of the MENA region will have to go B2B soon, in order to able to procure their supplies."

Digitel will invest the $100 million over the next five years. A return of up to 25% is being targeted and investments will be exited through either a stock market flotation or private equity sale. The founding partners have contributed an unspecified proportion of the fund's $100 million pool and are very confident they will raise the rest from investors around the region.

Between them, Digitel's four founders have extensive experience both of the IT and investment worlds. Abdulaziz Jazzar and Ahmad Al-Sari will dissect the information technology component of business plans, whilst Ahmed Banaja and Fahad Almubarak will decide whether or not a proposal has a chance of profitability.

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