JEDDAH – Saudi Arabia’s government and one of the country’s biggest banks plan to start a venture capital fund of as much as SR1 billion ($270 million) to invest in new technology companies.

Riyad Capital, the investment banking arm of Riyad Bank (RIBL), will manage the fund, while Saudi Technology Development and Investment Co., a subsidiary of the Public Investment Fund, will provide seed capital, according to Adel Al Ateeq, head of asset management at Riyad Capital. The venture, which may make its first investment before the end of the year, will target the advanced materials, sustainable energy, and information, communication and technology industries, Al Ateeq said in an interview in Dubai on June 1.

The fund intends to capitalize on interest in developing new industrial materials from companies like Saudi Basic Industries Corp. (SABIC), the world’s largest petrochemical maker by market value, and the country’s $109 billion spending on solar energy. Economic expansion in Saudi Arabia is forecast to accelerate to 4.2 percent this year from 3.8 percent, according to the median of 18 estimates compiled by Bloomberg.

“We’re going to invest in international companies that are relevant to Saudi” as well as in local businesses, Al Ateeq said. “None of our competitors are looking into venture capitals. It’s an ignored sector.”

Domestic investments will be focused on technologies developed by the King Abdulaziz City for Science and Technology in Riyadh, Al Ateeq said. Initially the fund will seek minority stakes of as much as 5 million riyals, he said. — SG/Agencies