Shareek targets companies listed or eyeing IPOs with over SAR 10 bln investment plans: CEO

Abdulaziz Al-Arifi CEO of Shareek

Shareek aims to unlock SAR 5 trillion in domestic private sector investments by 2030 by providing tailored support to enable additional projects that were not part of the companies' investment plans, said CEO Abdulaziz Al-Arifi, in an exclusive interview with Argaam.

Furthermore, the program focuses on large companies that implement projects with a high and tangible impact on the national economy, and boost their market value by maximizing the volume of their local investments, he added.

The top official also pointed out that Shareek is intended for large companies in the Kingdom that have an investment plan within the Kingdom at over SAR 10 billion between 2021-2030, or invest SAR 1 billion annually, and those listed or targeting to go public within a specific period to be agreed upon.

Moreover, Shareek does not focus on specific sectors, but rather provides support for all qualified large companies in various sectors. It mainly focuses on developing private sector investments in the Kingdom in general, as the companies that were recently added to the program represent most sectors of the Saudi economy, Al-Arifi said.

Investment opportunities for large companies are developed by sectorial supervisory committees, with active participation by the relevant ministries.

Here’s the full interview with Al-Arifi:

Q: What is Shareek program? What are the goals and impact it seeks to achieve? How does Shareek contribute to realizing Vision 2030?

A: HRH Crown Prince Mohammed bin Salman launched Shareek program in March 2021 with the aim of contributing to achieving the Kingdom's economic development goals by enabling private sector investments.

The private sector is of great importance to many goals of Vision 2030, including raising the private sector's contribution to GDP to 65%, which confirms the government interest in developing and supporting the private sector. The Shareek program is just one example of this interest.

Moreover, Shareek seeks to increase the domestic investment of large private sector companies to SAR 5 trillion by 2030, through government-approved tailored support, as well as enabling add-on investments that cater to the Kingdom’s strategic economic goals.

The Shareek program aims to boost public-private partnerships to foster collaboration, deepen sector specialties, deliver outsized economic and social impact and maximize non-oil export potential. These are important contributors to the Vision 2030 target of improving the Kingdom’s global GDP ranking reach 15th by 2030.

Q: In light of the presence of several government agencies focused on supporting investments in the Kingdom, how does Shareek work within the government system? How is Shareek linked to NIS?

A: The Large Companies Investment Committee,chaired by HRH Crown Prince, is formed to oversee the Shareek program. The committee and the program are organizationally linked to the Strategic Committee of the Council of Economic and Development Affairs. Shareek works with all relevant government agencies to ensure the integration and coordination of efforts, mainly the Ministry of Investment, which supervises the National Investment Strategy (NIS).

The program is particularly focused on large companies that implement projects with a high and tangible impact on the national economy. It raises their market value by maximizing the volume of their local investments, and this focus is what distinguishes Shareek in the government system.

Furthermore, the formation of government programs that are focused on a specific category of investors or certain sectors are  proven way to grow key industries and support economic development. For example, Taiwan developed a government program to support semiconductors during the 1970s. During the same period, South Korea provided support for heavy industries through the Economic Planning Council, which contributed to building major global partnerships with Samsung, LG and others. Thanks to advance planning, the two countries were able to achieve a leading global position in these areas.

To this extent, Shareek studies all projects that it jointly supports with the relevant government agencies, by forming a specialized team for each project, and submitting a joint recommendation on it.

Investment opportunities for large companies are developed through sectorial supervisory committees,with active participation by the relevant ministries.

Q: Does Shareek focus on specific sectors? How does it contribute to the development of the sectors it supports?

A: Shareek does not focus on specific sectors, but rather provides support to all qualified large companies across various key industries. The program considers the national and sector strategies as a roadmap that define government trends in each sector, on which it relies when developing investment opportunities for large companies. As part of its study, the impact of Shareek on a certain sector and the extent of compatibility with the relevant sector strategy are studied.

For example, the strategy of the ICT sector focuses on supporting data storage capacity in the Kingdom in order to consolidate its position as a leading technology hub in the region. This in turn aligns with the investment objective of a number of large private companies. The role of Shareek is to develop and support investment opportunities that meet the aspirations of the public and private sectors.

The National Strategy for Industry aims to raise the contribution of the industrial sector to GDP to SAR 900 billion by 2030, while focusing on a number of key industrial sectors to diversify the Kingdom's industrial economy. Shareek enables these investments, which include the localization of some industries related to the maritime sector, in line with the objectives of a number of large companies joining the program.

There are many other examples of investment opportunities in which government trends are compatible with private sector plans.

Q: What are the qualification criteria to join Shareek? How can unqualified companies benefit from its support?

A: Shareek program is intended for large companies in the Kingdom that have an investment plan within the Kingdom at over SAR 10 billion by 2030, or invest SAR 1 billion annually, and those listed or targeting to go public within a specific period to be agreed upon.

These companies serve as a major driver for any economy in the world, as the growth of their investments impacts the economic activity in general.

This impact becomes more evident when add-on quality projects are enabled. This is the main focus of Shareek due to the role played by these projects in localizing new sectors in the Kingdom, and the subsequent demand for services.

This also provides a new opportunity for all private firms – not only large companies – which, in turn, contributes to their growth and expansion, particularly as Shareek sets a condition for a high economic multiplier for all supported projects. Hence, these projects will have a high positive impact on many economic variables, such as gross domestic product (GDP).

Large companies cannot grow their investments and operations without support for small and medium-sized enterprises (SMEs). Accordingly, the growth and empowerment of large companies’ investments, with the support of Shareek, provides huge opportunities for other companies investing in value and supply chains for supported projects.

Q: What are the aspects on which Shareek focuses when studying projects?

A: The program primarily focuses on the financial sustainability of the projects it supports. It also considers the economic impact of such projects, including the effect on GDP, the localization of new industries, support for the Kingdom’s trade balance and creation of job opportunities for Saudis.

Further, Shareek allocates support for additional investments, that do not fall under the category of normal projects. This provides an additional value for the Saudi economy, through tailored government support.

The impact of projects on the related sectors and their alignment with national and sector strategies in the Kingdom are also taken into consideration. Shareek also seeks to accelerate the investments of large companies, given the importance of the high economic return delivered to the Kingdom.

On the other hand, Shareek also focuses on the growth of large companies in Saudi Arabia, and supports projects that help add value for investors and diversify the portfolios of those companies. It also provides support that reduces investment risks, ensures high economic feasibility and profitability, and ensures optimization of the program’s resources and government support.