Reforms have helped drive rapid investment growth, with gross fixed capital formation increasing by 74 percent from 2017 to nearly $300 billion in 2023…reports Asian Lite News
Khalid Al Falih, Saudi Minister of Investment, said that the pro-investment measures introduced by Saudi Arabia in recent years include the introduction of the Civil Transactions Law, Private Sector Participation Law, Companies Law, Bankruptcy Law and Special Economic Zones.
These reforms have helped drive rapid investment growth, with gross fixed capital formation increasing by 74 percent from 2017 to nearly $300 billion in 2023.
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Additionally, Foreign Direct Investment (FDI) stock increased by 61 percent from 2017 to 2023, reaching almost $215 billion in 2023, and FDI inflows have surged by 158 percent, jumping from $7.5 billion in 2017 to $19.3 billion in 2023. These initiatives and developments, in addition to incentives, facilities, and enablers, have motivated investors to seek a positive, supportive, and stable investment environment, the Saudi Press Agency (SPA) reported.
The minister added, “The law reaffirms Saudi Arabia’s commitment to creating a welcoming and secure environment for investors, driving economic growth, and enhancing the Kingdom’s position as a premier global investment destination.”
The policy direction outlined in Vision 2030 allows investors to invest with certainty and to grow with confidence at a time when many other markets are experiencing considerable volatility.
The executive regulations will come into effect beginning in 2025.
PE Report
The “2019-2023 Saudi Arabia Private Equity Report” revealed that the Kingdom had witnessed a remarkable surge in Private Equity (PE) activity, reaching a pinnacle of approximately $4bn in 2023, reported the Saudi Press Agency (SPA).
According to the report published by the venture data platform, MAGNiTT, and sponsored by SVC, the Private Equity landscape has displayed consistent growth since 2020, experiencing a substantial 3.7x rise in 2021 and further catapulting to 5.9x its 2021 level in 2022.
The report also revealed that the PE activity in the Kingdom has been characterised by significant transactional diversity and concentration in specific industries over the past five years. Notably, Food & Beverages emerged as the most transacted industries within the PE landscape between 2019 and 2023.
Manufacturing claimed the top spot in terms of total investment, commanding 46% of the capital deployed during this period.
Notably, the composition of PE transactions has undergone significant shifts, particularly with a pronounced emphasis on Buyout transactions. Between 2020 and 2023, Buyout transactions witnessed a notable 20-percentage point increase in their share of the total, while concurrently, Growth transactions saw a growth of 2 percentage points over the same period.
Across the last five years, Buyout transactions have dominated the PE investment landscape, capturing an average of 80% of the total capital deployed in these transactions. This trajectory underscores the evolving dynamics and the increasing prominence of Private Equity within the Kingdom’s financial ecosystem, reflecting a strategic shift in investment preferences.
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