Regional markets offer opportunities for investments

JEDDAH: Saudi Arabia will most likely continue to open up its markets and the high oil prices are not likely to affect this process, said Ammar AlKhudairy, CEO of Amwal AlKhaleej, a leading regional private equity firm. He added that Saudi Arabia would most likely continue to encourage the exchange of capital, technology and ideas and attract foreign investment. “Initially, there was a bit of concern in the business community that given the rising oil prices there might be a decline in the sense of urgency in opening up the economy and attracting foreign investment into the country. Instead, the government of Custodian of the Two Holy Mosques King Abdullah steadfastly continued toward his objective of opening up the economy and has not wavered because of the strong economic benefits of high oil prices,” he said. “No country wants to discourage foreign investment. For example the US is the largest economy in the world and it has its doors wide open for foreign capital,” AlKhudairy said in an exclusive interview with Arab News.

As inflation has become a hot topic in the Kingdom as well as within the Gulf Cooperation Council (GCC) countries, AlKhudairy said some people think that inflation was a locally created challenge, but it is not. Inflation is a global phenomenon, he said.

“Don’t expect the government to shake a magic wand to make inflation zero. It doesn’t work that easily as Saudi Arabia is a part of global economy,” he stressed.

Historically Saudi Arabia has managed inflation better than many other economies in the world. Saudi Arabia has done a very good job of managing 1 percent to 2 percent inflation for nearly 15 to 20 years. At that time, global inflation was in the 2 to 3 percent range but now it is much higher. So, we are still managing to keep the inflation relatively low but it will be difficult to keep it as low as it was in the past couple of decades.

The CEO of Amwal AlKhaleej said, “As investment partners, we are already very active throughout the Middle East and North Africa (MENA) region. We have investments in UAE, Egypt, Bahrain, Kuwait and Lebanon, as well as Saudi Arabia.” He further said, “We have about SR2.5 billion investment capital and are hoping to better that by increasing capital through our founding partners.”

When asked whether Amwal AlKhaleej, which started its operations in Riyadh in 2005 and now has offices in Dubai and Cairo, was planning to go public, AlKhudairy ruled it out. He said, “We are not planning to go public. We are planning to take public a number of our investor companies, which demonstrates our firm’s commitment to creating value for our founding investors, key partners and investor companies.”

He added: “We firmly believe that the regional markets have offered and will continue to offer highly attractive opportunities for private equity investors, in a number of economic sectors, including retail, services, construction materials and petrochemicals. These sectors are vibrant and very promising throughout the Middle East. We are bullish whether it is short-term or long-term.”

While talking about challenges in the Saudi stock market, AlKhudairy, who sits on a number of corporate boards, said “Saudi Arabia is on the verge of a fantastic economic expansion, and I think investors have seen the potential and manifested their optimism through overbuying in the market. The market then overheated going beyond a fair valuation and unfortunately, some investors had to pay the price of what Alan Greenspan (former governor of the US Federal Reserve Board) has called ‘irrational exuberance’.” He added, “As for today, the Saudi market is undervalued, given the economic prospects of Saudi Arabia in the medium— to long-term. However, there will continue to be a lot of volatility in the market due to the market events of the past couple of years.”

When asked about how Saudi Arabia has benefited after joining the World Trade Organization (WTO), AlKhudairy said the country was already in the process of carrying out some of the economic reforms but perhaps WTO accession had helped in accelerating that process.