Saudi asset manager backs HOF Capital Strategic Opportunities Fund II as it moves to expand its private markets business and prepare an AI-focused investment vehicle

Saudi Arabia’s Derayah Financial is increasing its exposure to artificial intelligence and advanced technology. This is with a USD 65 million (SAR 244M) commitment to HOF Capital Strategic Opportunities Fund II. This is a move that could also lay the groundwork for a broader AI-focused investment product.

Why You Should Care

The commitment gives Derayah exposure to a portfolio expected to span around 15 investments across artificial intelligence, enterprise software, and other advanced technologies. More importantly, the investment is part of a wider push by the company to grow its asset management business, particularly across private markets.

Derayah paid 40% of the commitment, equivalent to SAR 97.5 million (USD 26 million), when the fund closed on August 28. The remaining 60% is expected to be paid over the next 24 months, with the timing and amounts subject to the fund’s requirements. The transaction will be financed through Derayah’s internal resources and available credit facilities.

The Details

HOF Capital Management, the fund manager, is targeting USD 1.2 billion  (SAR 4.5B) for HOF Capital Strategic Opportunities Fund II. This is with a maximum fund size of USD 1.5 billion (SAR 5.62B).

The fund is designed to capture opportunities created by growing demand for AI-based products and technologies, alongside investments in enterprise software and other advanced technologies. The fund manager will ultimately determine the number and composition of portfolio companies.

For Derayah, however, the investment extends beyond gaining exposure to the fund itself. It plans to establish a multi-strategy fund focused on AI and technology, subject to obtaining the necessary regulatory approvals. Once that vehicle is launched, Derayah intends to transfer its investment in HOF Capital Strategic Opportunities Fund II into the new fund, which would be managed by Derayah’s asset management team.

The structure could allow Derayah to build an investment offering around a sector that is attracting increasing global capital while using its own asset management platform to bring the strategy to prospective investors.

The Ripple

The move comes as AI increasingly becomes an investment theme spanning venture capital, enterprise software and broader technology markets. For Saudi asset managers, expanding access to these opportunities can also deepen the range of private market products available to local investors.

Derayah expects the transaction to support its asset management business through subscription and management fee revenues. This is once the planned vehicle is established, launched and successfully offered to investors.

The deal also gives Derayah a potential route to develop in-house expertise around a global technology portfolio.  

What to Watch

The next key step is regulatory approval for Derayah’s proposed multi-strategy fund focused on AI and technology. If approved and launched, Derayah plans to transfer its investment in HOF Capital Strategic Opportunities Fund II to the new vehicle, which would be managed by its asset management team.

Investors will also be watching how the underlying fund builds its portfolio of around 15 investments across AI, enterprise software and advanced technologies. Derayah expects the planned vehicle to generate subscription and management fee revenues once it is established, launched and successfully offered to investors.