JEDDAH: Saudi Arabia, Kuwait, and Egypt are offering the most promising opportunities across sectors. However, the notable ones are in downstream oil and gas and petrochemicals, with health care and consumer products in the private sector space, says an economist.

Another noticeable phenomenon is that many large family-owned businesses in the GCC, which includes Saudi Arabia, the UAE and four other countries, are attempting to sell assets that they own outside the region as the sentiment in the Gulf is cautious given oil’s decline.

This view of the economist is shared by many others at a time when Saudi Arabia is deeply engaged in pursuing Vision 2030; the Kingdom is seeking to reduce its reliance on oil after a plunge in prices that started in 2014.

As such, there seem to be plans by some investors to diversify into other markets.

The situation is most likely to result in initial public offerings (IPOs) returning to the region after a gap of time.

The country plans an IPO of Saudi Aramco, which may value the company at more than $2 trillion.

The Aramco share sale is part of the strategy to create a sovereign wealth fund that will eventually control more than $2 trillion and boost income from investments.

The Kingdom is also reported to be seeking to potentially breakup its Saudi Electricity Co. into four independent power generating companies.

“It’s all about sentiment and confidence so a question of finding the right window, which should turn as global sentiment improves," said Omar Iqtidar, Citigroup’s head of investment banking in the Middle East, in an interview in Dubai.

Nevertheless, Saudi Arabia is considered the best emerging market for new deals.

Saudi Arabia’s planned privatizations, including a share sale in the world’s biggest oil company, represent the biggest investment banking opportunity in emerging markets, according to Citigroup.

Implementation of Vision 2030, which is aimed at restructuring the economy, “could translate into a fantastic wallet for the investment banks. We are seeing momentum picking up, with skeptics increasingly converted into believers of the restructuring," he said.

Meanwhile, global investment banks are jostling for roles advising the government on everything from sovereign loans to IPOs.

JPMorgan Chase & Co. and Michael Klein, the former Citigroup investment banker who runs his own boutique, have been selected to advice on Saudi Aramco’s IPO, people familiar with the matter said in April. Saudi stock exchange (Tadawul), the biggest in the Middle East and Africa, has hired HSBC Saudi Arabia as a financial adviser for its IPO, scheduled for 2018.

Citigroup last year won approval to trade Saudi equities, its first banking license since exiting the country in 2004, people with knowledge of the matter said in September. The bank is directly investing in companies listed on the Saudi stock exchange after the stock market opened to direct foreign investment last June.

The New York-based bank sold its 20 percent stake in the Saudi American Bank, now known as Samba Financial Group, to the state Public Investment Fund for $760 million in 2004, ending a business that it helped form in 1955. It has still won a role advising on some of the largest deals from the country, including Saudi Basic Industries Corp.’s acquisition of General Electric’s plastics unit for $11.6 billion in 2007. It was also part of Saudi Aramco’s $10 billion loan in 2015.

According to reports, crude’s more than 50 percent plunge since the middle of 2014 is pushing governments across the region to dip into past savings, boost borrowings and cut spending, which is slowing economic growth. That has helped make regional assets cheaper, with Saudi Arabia’s benchmark index down 33 percent from a year ago and Dubai’s by 15 percent.

Mergers and acquisitions in the Middle East and Africa have declined 43 percent this year to $17.8 billion, according to data compiled by Bloomberg. Citigroup is the region’s third-biggest adviser for M&A transactions this year, according to the data.

“Regional mergers and acquisitions may not appear very active in terms of announced deals, but the pipeline is very strong and there are a lot of deals happening," Iqtidar said, adding the bank is also seeing significant improvement in fees.