Investcorp Positive On Saudi Arabia’s Investment Outlook

24 Nov 2014

Investcorp, a leading global provider and manager of alternative investment products recently provided its optimistic expectations about investments in the Kingdom of Saudi Arabia.

Investcorp is positive on the Kingdom’s growth prospects over the coming period driven by a number of key fundamentals including the macro-economic environment, attractive demographics and a healthy financial system.

Walid Majdalani, Managing director, CI-MENA, said, “Saudi Arabia’s increasingly deregulated and competitive economic environment is facilitating rapid growth in business development within the private sector which is assuming an increasingly important role in the Kingdom’s economy. This provides significant opportunities for our firm with family business owners, in particular, looking for investment partners to add value and drive growth. These are exactly the types of opportunities we invest in: solid businesses with good growth potential and high quality management teams. By working together with these types of companies, as we have shown consistently for more than 30 years, we can help deliver significant value for our investors and shareholders by supporting the ambitions of business owners. With macro-economic stability, ample liquidity, and broad investment opportunities, the Kingdom is expected to become a major market for foreign investment.

We believe, Saudi Arabia is primed for long term growth with exciting prospects across the infrastructure, manufacturing, energy related services, and retail sectors”

Investcorp has been active in the Kingdom for over 30 years and currently owns four growth businesses based in Saudi Arabia including: Fitness Time, a leading fitness chain operator; Theeb, the car rental business; AYTB, the oil and gas sector support services company; and L’azurde, a leading designer, manufacturer and distributor of gold jewellery for the premium mass market.

Saudi Arabia is the region’s largest economy and the world’s 19th largest. Saudi Arabia is expected to exceed world growth, with real GDP growth of 4.6% forecast for 2014, as compared to 3.3% forecast for the rest of the world.

Saudi Arabia continues to diversify away from the oil sector with non-oil sector contribution to GDP increasing from 45% in 2008 to 53% in 2013.

Furthermore, with the growth in government expenditures (the 2014 budget was approximately $228 billion), excess reserves of foreign assets of approximately $700 billion in 2013 and low levels of sovereign debt (at 2.7% of GDP, Saudi Arabia’s sovereign debt is significantly lower than the rest of the GCC, Europe and the US), Saudi Arabia is very well positioned to continue its strong and sustainable growth trajectory.