Vision 2030 putting Saudi Arabia on the map for global investors, experts say

Special Vision 2030 putting Saudi Arabia on the map for global investors, experts say
Vision 2030 is continuing to bear fruit. Shutterstock
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Updated 12 April 2024
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Vision 2030 putting Saudi Arabia on the map for global investors, experts say

Vision 2030 putting Saudi Arabia on the map for global investors, experts say

JEDDAH: Saudi Arabia’s investment landscape is poised for a prosperous future, fueled by its equity and debt markets, a range of economic experts have told Arab News.

Senior figures from the Kingdom’s branch of investment bank J.P. Morgan, financial media outlet Bloomberg, and Saudi tourism funding firm ASFAR all spoke of the positive impact of the Vision 2030 economic diversification strategy. 

By focusing on the growth of various sectors, such as tourism, healthcare, and renewable energy, the Kingdom aims to reduce its economic reliance on fossil fuels, foster innovation, create jobs, and enhance citizens’ quality of life. 

This is already bearing fruit, according to Amine Fichtali, head of investment banking at J.P. Morgan Saudi Arabia.

He told Arab News that the Kingdom stood out as an exciting, compelling investment story for investors.

Fichtali added that Saudi Arabia is a top-down, long-term structural story underpinned by socio-economic transformation and the execution of several regulatory reforms that help to promote the Kingdom globally.

These sentiments were echoed by European Director of Bloomberg Constantin Cotzias. 

He believes that Saudi Arabia — with various reforms in its regulatory framework — is emerging as a favorite destination for international investors. 

Cotzias told Arab News that international investors want three things.

“They want liquidity, a framework of governance and regulation that works, and a balance of good supervision and innovation to be properly balanced. And then they want that framework to encourage them with investment and the growth in that investment,” he said, adding that Saudi Arabia is on the right path.

One of the initiatives to attract businesses to the Kingdom was to offer tax breaks and other incentives to companies that applied to move their regional headquarters to Riyadh before the end of 2023.

This helped encourage some 200 firms to make the shift, including Northern Trust, Bechtel and Pepsico from the US, and IHG Hotels and Resorts, PwC, and Deloitte from the UK.  

Google, Microsoft and IBM as well as Oracle, Pfizer and Amazon, also have regional headquarters in Riyadh.




Saudi Arabia’s Minister of Investment Khalid Al-Falih presented IBM executives with the regional HQ license in January. IBM

Tourism strategy 

Tourism is one of the key sectors driving the economic shift in the Kingdom, and Saudi Arabia has launched several initiatives to grow the industry.

These include the opening of historical sites, easing of visa restrictions, and the promotion of cultural heritage to attract international visitors. 

All these measures are expected to have huge economic returns and boost the tourism sector resulting in the creation of direct and indirect jobs.

The Kingdom is targeting more than 30 million pilgrims and 150 million tourists every year as part of its ambitious Vision 2030, having already met its original goal of 100 million visitors.

Speaking during a ministerial panel session at the Private Sector Forum held in Riyadh in February, Tourism Minister Ahmed Al-Khateeb said that the total number of hotel rooms in the Kingdom reached 280,000 in December.

“The quality of rooms and projects is excellent and will place the Kingdom among the best in the world. The target for 2030 is approximately 550,000 hotel rooms,” the minister informed.

Moreover, the Ministry of Tourism recently unveiled the Tourism Investment Enablers Program, aimed at streamlining business practices and bolstering investment appeal for both local and international investors.

As part of the program, the Ministry of Tourism, in collaboration with the Ministry of Investment, announced the Hospitality Sector Investment Enablers Initiative, aiming to increase and diversify tourism offerings and bolstering the capacity of hospitality facilities in targeted tourist destinations across the Kingdom.

This initiative aims to attract investments in the hospitality sector, with a value of approximately SR42 billion ($11.46 billion), projecting estimated revenues of about SR16 billion to the Kingdom’s gross domestic product by 2030, reported SPA.

Al-Khateeb stated: “We witnessed a 390 percent increase in demand for tourism activity licenses last year, marking the beginning of the Kingdom’s significant investment in the tourism sector over the next decade, providing opportunities and a conducive investment environment for both local and international investors.”

Meanwhile, ASFAR CEO Fahad bin Mushayt told Arab News many regulations have recently changed, and more are yet to come, including the facilitation of visa issuance, be it for business, religious, or tourism purposes.

ASFAR is a company owned by the Public Investment Fund to drive investments in tourist destinations and projects across the Kingdom. 

“The other target that the country has set as part of Vision 2030 is to drive the contribution of tourism to the gross domestic product from 3 percent to 10 percent by 2030,” he added.




Fahad bin Mushayt, CEO of ASFAR. (Supplied)

National industrial program 

The Saudi industrial sector is significantly contributing to economic diversification through various programs and initiatives.

One of these is the National Industrial Development and Logistics Program, which seeks to elevate the Kingdom into a premier industrial powerhouse and a worldwide logistics center.

NIDLP focuses on optimizing the mining and energy sectors’ value while harnessing the full potential of other local resources. 

Speaking at the NIDLP annual ceremony in December, Minister of Industry and Mineral Resources Bandar Alkhorayef explained that the program acquired five new renewable energy projects to ensure reasonable costs.  

He noted that the NIDLP program has significantly contributed about 35 percent of the non-oil GDP, making up to SR345 billion. 

Furthermore, NIDLP announced investments worth SR206 billion in non-oil exports and SR97 billion in nongovernmental funds.

Alkhorayef also highlighted the mining sector’s record revenues of over SR1.45 billion in 2023. 

Economic journalist Jamal Banoon told Arab News that diversifying the industrial base is a strategic challenge for Saudi Arabia, as it seeks to develop this sector sustainably and achieve economic diversification.

“One of the most important aspects is investing in infrastructure and research and development, while enhancing industrial infrastructure to accommodate investments and develop industrial projects, with the aim of improving production techniques and processes and enhancing efficiency,” he said.

Banoon added that, in recent years, Saudi Arabia has focused on emerging industries, including renewable energy, information and communications technology, robotics, and smart manufacturing. 

Consequently, this direction will drive it toward more alliances with international companies to transfer technologies and experiences, enhance competitiveness, and expand markets.

Furthermore, he added that Saudi Arabia has invested around $50 billion in infrastructure and research and development so far, especially in the field of emerging industries. It has also achieved significant growth in sectors such as aviation, space, and maritime industries.

Renewable energy drive 

Saudi Arabia has been actively pursuing renewable energy initiatives to diversify its energy mix and reduce its reliance on fossil fuels, with Vision 2030 outlining ambitious goals for the Kingdom's renewable energy sector.

The vision aims to increase the share of renewable power in the energy mix to 50 percent by 2030.

NEOM, for instance, is a flagship project aimed at developing a futuristic city powered entirely by renewable energy. It envisions a sustainable and environmentally friendly urban center with a focus on renewable energy and innovation.

Moreover, the Green Riyadh Initiative aims to transform the capital city into a more sustainable and environment-friendly metropolis. It includes plans for expanding green spaces, promoting energy efficiency, and implementing renewable energy projects.

Furthermore, Saudi Arabia has been investing in research and development of renewable energy technologies to drive innovation and enhance the efficiency of renewable power generation.

According to Banoon, Saudi Arabia is expected to become a leader in clean energy and achieve environmental sustainability.

“Within its plans and programs toward further economic liberalization and income source diversification, the Kingdom has invested in renewable energy sources. It aims to increase productivity from the current 300,000 megawatts through the Sakaka solar power plant and the Dumat Al-Jandal wind farm, expecting to reach 2 gigawatts of renewable resources,” he said, adding this project relies on generating electricity from traditional fuel sources.

Healthcare development 

Saudi Arabia’s efforts to diversify its economy through healthcare are commendable and strategically significant.

By focusing on the healthcare sector as a key driver of economic diversification, the Kingdom aims to enhance the quality of healthcare services, improve accessibility, and foster innovation and technological advancement within the industry.

Banoon commented that the healthcare sector diversification strategy is crucial for Saudi Arabia’s economic resilience and sustainability.

“Saudi Arabia’s investments in healthcare infrastructure are pivotal for attracting foreign investment and talent, driving economic growth in the long term,” the economist said, adding that investing in preventive healthcare not only improves public health outcomes but also reduces costs in the long run, contributing to economic stability.


Saudi PIF, French private equity group to acquire 38 percent of Heathrow airport

Saudi PIF, French private equity group to acquire 38 percent of Heathrow airport
Updated 15 June 2024
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Saudi PIF, French private equity group to acquire 38 percent of Heathrow airport

Saudi PIF, French private equity group to acquire 38 percent of Heathrow airport
  • Ferrovial to remain as shareholder under revised deal for UK’s busiest hub

LONDON: Saudi Arabia’s sovereign wealth fund and a French private equity group will acquire a 38 percent stake in Britain’s busiest airport, Heathrow, officials announced on Friday.

Dutch-based transport company Ferrovial SE said the Public Investment Fund and Ardian had made a revised offer to acquire shares representing 37.62 percent of the share capital of FGP Topco, the parent company of Heathrow Airport Holdings Ltd, for more than £3.2 million ($4.1 million).

Under the new agreement, Ferrovial, which operates in more than 15 countries, will remain as a shareholder with shares representing 5.25 percent of the issued share capital of FGP Topco.

Following the sale, the Topco shareholders and Ferrovial will together hold shares “representing 10 percent of the issued share capital,” while PIF and Ardian will buy 22.6 percent and 15 percent respectively of FGP Topco through separate vehicles, Ferrovial said.

“The parties have been working toward satisfaction of the condition for the sale of the Tagged Shares to be sold alongside Ferrovial’s shares by exploring different options to satisfy the same,” the statement added.

The deal remains subject to regulators’ approval, Ferrovial said.

In November, Ferrovial had said it was planning to offload its stake, with PIF taking 10 percent and Ardian taking 15 percent, but the deal has been amended to allow FGP Topco shareholders to sell their shares on the same terms under so-called “tag-along rights.”

“Ardian is pleased to have worked closely with the parties to find this revised agreement and reiterates its strong commitment to investing in the UK,” the French company said in a separate statement.

The private investment house, which manages or advises $166 billion of assets on behalf of more than 1,600 clients globally, added that it “actively supports its assets to accelerate their transformation by leveraging data and new technologies to reduce emissions, creating new, more sustainable revenue sources, becoming more independent and resilient to external shocks, and improving their impact on both local and global environments.”


IMF heralds Saudi Arabia’s ‘unprecedented economic transformation’ in glowing report

IMF heralds Saudi Arabia’s ‘unprecedented economic transformation’ in glowing report
Updated 14 June 2024
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IMF heralds Saudi Arabia’s ‘unprecedented economic transformation’ in glowing report

IMF heralds Saudi Arabia’s ‘unprecedented economic transformation’ in glowing report

RIYADH: Saudi Arabia’s “unprecedented economic transformation” is progressing well thanks to prudent government policies and successful diversification efforts, according to the International Monetary Fund.

In a report focusing on the changing economic landscape of the Kingdom, the organization highlighted growing domestic demand, ongoing financial reforms, and environmental policies as areas of strength.

The findings comes just days after the Organisation for Economic Co-operation and Development released figures showing that Saudi Arabia’s economy witnessed growth above the G20 average in the first three months of the year.

In a release to mark the the end of an official visit to the Kingdom by the IMF, the organization projected Saudi Arabia’s overall GDP growth will accelerate to around 4.5 percent in 2025 before stabilizing at 3.5 percent per year over the medium term.

It forecast non-oil growth to reach 3.5 percent in 2024 “before picking up in 2025 onwards.”

It added: “Oil output is projected to contract by 4.6 percent in 2024 but increase by 5.1 percent in 2025, reflecting an extension of oil production cuts in 2024 and a gradual recovery to 10 mbpd in 2025.”

Reflecting on the transformation policies undertaken by the Saudi government, the IMF noted that “Efforts to diversify the economy have started to bear fruit.”

The report added: “Building on these successes, it will be important to sustain the non-oil growth momentum, maintain financial sector stability, continue mitigating risks of overheating, reverse declining total factor productivity and ensure inter-generational equity.”

The IMF welcomed the “recent recalibration” of funding requirements associated with the Vision 2030 objectives, and also praised the Kingdom’s drive to become a haven for private sector development.

“Reforms to enhance Saudi Arabia’s business environment and attractiveness for foreign investment are progressing well,” said the IMF, noting that Saudi Arabia climbed 15 notches in the IMD’s World Competitiveness ranking in two years, obtaining the 17th position globally in 2023. 

“Ongoing work to boost human capital through the Human Capability Development program, further increases in female labor force participation, significant strides in digital transformation and AI preparedness, streamlining of fees and levies, promotion of access to land and finance, and stronger governance would further enhance private sector growth, help attract more FDI, and contribute to total factor productivity growth,” the report added.

The IMF described Saudi Arabia’s financial sector as being on a “strong footing,” noting that bank credit growth – mainly to the corporate sector – continues to surpass deposit growth and is expected to remain at around 10 percent in 2024. 

“The continued efforts by SAMA to modernize the regulatory and supervisory frameworks are key to safeguarding financial stability,” said the report, adding: “SAMA should continue using macroprudential tools to forestall possible risks stemming from a lending boom.”

The report also noted Saudi Arabia’s environmental initiatives, saying that the Kingdom “remains committed” to achieving net zero emissions by 2060. 

“The authorities continue to invest in renewable energy, energy efficiency, clean hydrogen, and carbon capture technologies,” said the IMF, adding: “Eliminating energy subsidies would incentivize energy conservation and improve returns on investment in renewable energies. Augmenting the active green finance portfolio—including through the implementation of the Green Finance framework announced in March 2024 and by an inaugural sovereign green bond issuance planned for this year—would be critical for mobilizing private capital.”


China approves first ETFs tracking Saudi equities, fund managers tell Reuters

China approves first ETFs tracking Saudi equities, fund managers tell Reuters
Updated 14 June 2024
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China approves first ETFs tracking Saudi equities, fund managers tell Reuters

China approves first ETFs tracking Saudi equities, fund managers tell Reuters

SHANGHAI: China approved its first exchange-traded funds investing in Saudi Arabia equities on Friday, fund managers told Reuters, as Beijing expands ties with the Middle East amid rising tensions with the West.

The products, managed by China’s Huatai-Pinebridge Investments and Southern Asset Management separately, will track Hong Kong-listed CSOP Saudi Arabia ETF, which debuted in November by Hong Kong-based CSOP Asset Management, according to the two fund managers.

“The approval will further deepen the cooperation between Saudi and China in capital markets,” said Ding Chen, chief executive officer at CSOP.

The CSOP Saudi Arabia ETF, which tracks the performance of the FTSE Saudi Arabia Index, is down roughly 5 percent so far this year, compared with a 3 percent gain in China’s stock benchmark CSI 300 .

Reuters reported in August that China and Saudi Arabia’s stock exchanges were talking about allowing exchange-traded funds (ETFs) to list on each other’s bourses, as the countries look to deepen financial ties amid warming diplomatic relations.

Through the ETF, investors in China will be able to trade Saudi stocks including the oil giant Saudi Aramco and Saudi National Bank.

Beijing, frustrated by what it sees as Washington’s weaponization of economic policies, has sought to expand ties with countries in Europe, the Middle East and Africa. Its diplomatic push to court others include US ally Saudi Arabia.

Earlier this week, China’s securities regulator told Reuters that it welcomes foreign financial institutions and investors, including those from the Middle East, to expand investment in China.

The statement was made in response to a Reuters request seeking comment on news that Qatar’s sovereign wealth fund had agreed to buy a 10 percent stake in China Asset Management Co., the country’s second biggest mutual fund company.


Saudi deputy minister highlights Kingdom’s manufacturing sector potential to German businesses

Saudi deputy minister highlights Kingdom’s manufacturing sector potential to German businesses
Updated 14 June 2024
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Saudi deputy minister highlights Kingdom’s manufacturing sector potential to German businesses

Saudi deputy minister highlights Kingdom’s manufacturing sector potential to German businesses

RIYADH: Investment opportunities in Saudi Arabia’s manufacturing sector were set out to a host of German companies by the Kingdom’s deputy industry minister during a trade show in Frankfurt.

Engineer Khalil Ibrahim bin Salamah met with representatives from firms including systems suppliers the GEA Group, chemical company LINDE, and packaging solutions company IMA, in a bid to strengthen ties between the two nations at a trade show in Frankfurt.

The minister discussed increasing cooperation with the business people, as well as setting out the most prominent investment opportunities provided in the Kingdom’s industrial sector, according to the Saudi Press Agency.

The meetings were held on the sidelines of ACHEMA, a global trade show for the chemical, pharmaceutical and food industry.

Bin Salamah also visited several big-name German petrochemical factories, such as Sanofi, during which he discussed enhancing innovation and sustainability and discovering opportunities to localize pharmaceutical industries.

He also held talks with representatives from global firms including Jagdamba Enterprise, Baker Hughes, and Panametrics.

 

 


Startup Wrap – Middle East SME funding activity flourishes with significant sums 

Startup Wrap – Middle East SME funding activity flourishes with significant sums 
Updated 14 June 2024
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Startup Wrap – Middle East SME funding activity flourishes with significant sums 

Startup Wrap – Middle East SME funding activity flourishes with significant sums 

CAIRO: The Middle East region has been witnessing a significant boost in startup activity, with numerous entrepreneurs securing funding across key sectors.  

Additionally, multiple investment pools were established, with Qatari and Emirati venture capitals aiming to further amplify the ecosystem. 

Regional startups are particularly eyeing the burgeoning Saudi market, with UAE-based proptech firm Stake raising $14 million in a series A funding round to enter the Kingdom.

The round was led by Middle East Venture Partners, with participation from Aramco’s Wa’ed Ventures, Mubadala, and Republic. 

Founded in 2021 by Rami Tabbara, Manar Mahmassani, and Ricardo Brizido, Stake is a digital real estate investment platform that offers options for income-generating properties in Dubai. 

The newly raised funds will be used to expand Stake’s services into Saudi Arabia this year. 

In 2022, Stake closed its pre-series A round at $8 million, backed by MEVP and BY Ventures, with participation from returning investors Vivium Holding and Combined Growth Real Estate. 

Saudi edtech Tahdir raises $270k in pre-seed round  

Saudi-based edtech Tahdir has closed a pre-seed funding round of $270,000 from a group of angel investors.  

Founded by Mohammed Al-Doukhi and Khalil Al-Haid, Tahdir’s platform automates daily school and educational management processes, and the company claims to be serving 92 schools with over 30,000 users. 

The investment will help the company enhance its capabilities and expand its operations within the Kingdom. 

Egypt-based medtech i‘SUPPLY secures pre-series A round  

i‘SUPPLY was founded in 2022 by Ibrahim Emam, Malek Sultan and Moustafa Zaki. Supplied

Egypt-based medical tech startup i‘SUPPLY has secured a pre-series A round, bringing its total funding to $2.5 million since its inception in 2022.  

This round saw participation from several investment funds, including Disruptech Ventures, OneStop Capital, Axian Investment CVC, and Egypt Ventures. 

Founded by Ibrahim Emam, Malek Sultan, and Moustafa Zaki, i‘SUPPLY aims to digitize the pharmaceutical business by offering a one-stop-shop solution to quickly predict and overcome supply chain disruptions.  

The new funding will bolster i’SUPPLY’s expansion plans, enhance its capabilities in financing small and medium-sized pharmacies, and further develop its fintech offerings and technological services. 

Egyptian fintech Sahl raises $6m in series A round 

Cairo-based fintech Sahl has raised $6 million in an investment that acts as a series A and seed funding round led by Ayady for Investment and Development. Existing investors Egypt Pay, Delta Electronic Systems, and E-Finance also participated in the round.  

Founded in 2020 by Ahmed Othman, Ibrahim Assal, and Abullah Assal, Sahl is a bill payment platform that allows users to recharge prepaid cards.  

The company is one of the few Egyptian firms integrating directly with several government entities.  

The new funds will help refine and develop Sahl’s offerings and extend its services to Saudi Arabia after its regional launch in the UAE.  

UAE’s Qstay raises $4.6m in pre-series A round 

Jumeirah beach residence. Supplied.

UAE-based hospitality platform Qstay has raised $4.6 million in a pre-series A funding round through a combination of conventional and convertible debt.  

Founded in 2020 by Artur Khayrullin, Ekaterina Rogozhina, Alec Fesenko, and Natalya Fesenko, Qstay operates as a virtual hotel brand with 200 units.  

Qstay provides digital app-based access to nearby pools, beaches, gyms, and spas for guests staying in beachfront properties.  

To date, the company has raised $11.1 million. In July 2022, Qstay closed a debt and equity Seed round of $6.5 million. 

UAE-based Polynome Group announces $100m fund for AI startups 

UAE-based event management company Polynome Group has announced a $100 million fund to invest in artificial intelligence startups.  

The fund will target startups in technology, AI software applications, and robotics, aligning with goals to expand the adoption of digital technologies beginning in the first quarter of 2025. 

The fund will adopt the “founders for founders” concept, investing in seed, series A, and growth stage startups with initial investments ranging from $500,000 to $5 million per company. 

UAE-based contech Tenderd secures $30m in series A funding 

Construction technology firm Tenderd has closed a $30 million series A funding round, led by A.P. Moller Holding, with new investors Quadri Ventures and Saurya Prakash joining existing investors Wa’ed Ventures, Nakhla Ventures, SOMA Capital, and Liquid 2 Ventures. 

Founded in 2018 by Arjun Mohan, Tenderd provides customers with AI-generated insights to increase asset utilization and reduce emissions, focusing on heavy industries such as construction and logistics.  

The capital will fuel technological innovations and support the UAE-based firm’s global expansion efforts. 

Qatar-based Rasmal Ventures launches first home-grown fund 

Qatar-based VC firm Rasmal Ventures LLC has launched its first home-grown fund, aiming to drive innovation and investment in Qatar and the Middle East and North Africa region.  

The Rasmal Innovation Fund I LLC targets high-performance startups in climate tech, fintech, business to business Software-as-a-Service, and AI sectors. 

For the initial closing, the fund has raised $30 million from institutional investors and family offices, with the goal of reaching $100 million in investment commitments. 

Kuwait-based travel tech Waves secures investment round 

Kuwait-based travel tech startup Waves has closed an investment round for an undisclosed amount, co-led by BNK Capital and Aujan Enterprises.  

Founded in 2021 by Abdulrahman Al-Sadoun and Sulaiman Al-Tunaib, Waves is an online marketplace for booking sea trips, marine activities, and chalets with operations in Kuwait, Saudi Arabia, Qatar, and the UAE. 

The investment will be used to enhance Waves’ services in Saudi Arabia. 

E-commerce platform Orisdi raises six-figure bridge round 

Iraq-based e-commerce platform Orisdi has raised a six-figure bridge round of investment, backed by existing investors including Al Sharqiya TV Group, Iraq Venture Partners, and various angel investors.  

Founded in 2019 by Ahmed Al-Kiremli and Hala Usama, Orisdi offers a range of products across verticals such as perfumes, cosmetics, appliances, stationery, and electronics. 

This funding round, which closed in April 2024, will support Orisdi’s business development efforts and highlight the potential of the e-commerce sector in Iraq.