Saudi Arabia Witnesses Robust Growth in PE Investments Since 2021

Private Equity (PE) investment is growing steadily in Saudi Arabia as the Kingdom has witnessed three years of consecutive growth, closing 2023 with $4 billion worth of transactions. After a 3.7X rise in 2021, PE broke through the billion-dollar range in 2022 at 5.9X its 2021 level.

The breakdown of PE transactions saw a rising focus on buyout transactions, which reported an increase in their share to total by 20PP between 2020 and 2023. In parallel, the share of Growth transactions rose by 2PP over the same period, Saudi Venture Capital (SVC) and Magnitt said in a report.

The breakdown of PE investment across the past five years was mostly covered by buyout deal values, which, on average, captured 80% of the total capital deployed in these transactions, the report said.

Food & Beverages was the most transacted industry across PE between 2019 and 2023, while Manufacturing topped the industries with 46% of the total investment in the covered period. The industries that received the biggest PE investments accounted for 94% of the total PE value over the past five years. Again, 88% of the total PE investment was attributed to buyout transactions across the top five industries.

The top five PE investments reported across the past five years captured a share of 76% of the total investment and were closed between 2021 and 2023. The transactions reigned down from Manufacturing, Financial Services, Healthcare, and Telecommunications.

Over the past five years, 49 investors have actively participated in shaping the Private Equity landscape in Saudi Arabia. Investors supporting multiple PE transactions were divided between Investment Companies and Asset Managers, featuring the presence of both PE firms and corporates.

Fascinating Growth                                           

SVC Chairman Ammar Alkhudairy said that the Kingdom has been witnessing remarkable growth at the level of PE investment, in parallel with the expansion seen in the venture capital (vc) space, the various components of Private Capital in Saudi Arabia all seem to adopt a growth trajectory.

“These trends underscore the resilience and attractiveness of the Saudi Arabian market for PE investments and SVC is playing a pivotal role in the PE landscape. We leverage expertise and strategic insights to drive value for our partners and stakeholders,” he added.

Huda Al Lawati, Founder and CEO of Aliph Capital, said that Saudi Arabia stands at a pivotal intersection where a burgeoning and entrepreneurial private sector converges with economic diversification, creating exciting opportunities for investment and growth.

We clearly see that PE has a leading role to play not only as a provider of capital but of capability, knowhow and technology to SMEs that are well-positioned to navigate one of the world’s youngest and most digitally savvy markets, she said.

“To complete the cycle, new exit avenues have continued to emerge in the form of public market listings, strategic M&A and secondary activity amongst financial buyers, Saudi saw 35 companies listing on Tadawul or Nomu in 2023 and strategic players such as Savola, STC and Dallah Healthcare demonstrating healthy appetite for inorganic expansion,” she added.