Sunday 21 July 2024

Increased M&A activity seen in Saudi Arabia

RIYADH, January 25, 2022

The government's significant progress toward Vision 2030 is accelerating growth in Saudi Arabia and the Kingdom is expected to solidify its position as the M&A leader in the region in 2022, says an expert.
Saudi Arabia became one of the most attractive markets for international companies looking to expand through mergers and acquisitions in 2021. The country's accelerated growth, which reached 6.8 percent in the third quarter of 2021, can be attributed to rising global demand for crude oil, ambitious Vision 2030 targets and the government's increased focus on improving the private sector, in addition to progress in combating the COVID pandemic. 
This has strategically positioned Saudi Arabia for continued mergers and acquisitions growth in 2022.
Paul Arnold, Managing Director of Sovereign Saudi Arabia, comments: “Saudi Arabia is probably the Middle East's most active M&A market. Although this acceleration in M&A activity is widespread, we have seen notable increases in healthcare, education, logistics, manufacturing, infrastructure, and entertainment. Additionally, we have seen significant investment in ESG and green energy, as well as technology, particularly in niche industries such as healthtech, edutech, and fintech.” 
Saudi Arabia has also made significant strides in strategic tourism development as part of its effort to diversify its investment away from oil. The Kingdom intends to invest more than $1 trillion in the tourism sector over the next decade. By 2030, the tourism sector in the kingdom is expected to contribute more than 10% of GDP, owing to Neom, a $500 billion futuristic metropolis that includes a natural reserve and historical sites on Red Sea islands, as well as Qiddiya, a major entertainment and sports project.
In 2021, fintechs took center stage in Saudi Arabia. According to the annual Saudi Fintech Report, the kingdom has seen a significant increase in venture capital investment in the fintech sector, with 16 deals totaling $157.2 million completed in the first eight months of 2021. This compares to 2020, when seven venture capital deals totaling $7.8 million were signed as a result of pandemic restrictions. 
Moreover, in line with Saudi Vision 2030 and the Financial Sector Development Program, the Kingdom’s central bank, SAMA, has recently announced its move to Open Banking which includes developing the digital economy and allowing financial intermediaries to support private sector growth by opening-up the financial services industry to new players. This will further support the continuing development of the fintech sector and will encourage the development of an advanced capital market in the Kingdom.  
“Saudi Arabia is fast becoming a regional hub for inbound investment as a result of the economy's growth, particularly during the pandemic, when many investors were forced to pivot due to supply chain delays and inflation in their home countries. Saudi investors, on the other hand, are looking to diversify their portfolios through outbound investment in order to bring global expertise and capabilities to Saudi Arabia,” added Arnold.
The Kingdom intends to transform Riyadh into one of the world's top ten cities by 2030, by doubling its population and increasing visitor arrivals to more than 40 million, the board of the Royal Commission for Riyadh City announced last month, he noted. – TradeArabia News Service


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