UAE's Gulf Capital mulls new Saudi deals as economy recovers

Abu Dhabi-based private equity firm Gulf Capital is seeking to invest in Saudi Arabia's emerging tourism and entertainment sector, as the Kingdom transits from an austerity period into an expansionary phase, its chief executive officer Karim El Solh told Argaam in an exclusive.

"We are intrigued by the opening of the tourism and entertainment sectors and hope to identify investments in these promising emerging sectors," he said.

Last year, Saudi Arabia’s General Entertainment Authority chairman Ahmed Al-Khatib announced plans to invest SAR 240 billion ($64 billion) in the entertainment sector over the next ten years.

Gulf Capital, one of the largest private equity players in the Middle East North Africa region with $3 billion in assets under management, is also actively looking at new investments in the new economy (e-commerce and fintech), healthcare, education, consumer and food sectors.

Fintech booming

The company, which acquired a strategic stake in Saudi Geidea for over SAR 1 billion, is expecting Vision 2030 program to propel the growth of fintech industry.

“Fintechs are today leading the second wave of opportunities within the digital transformation of our regional economies, with opportunities increasingly focused on transforming how payments, banks and financial companies are operating and offering their services.”

While Saudi Arabia is not only at heart of this regional fintech growth story, it has also embarked on a series of regulatory changes that aim to efficiently promote the industry and give to the private sector the needed tools to expand, he added.

“Saudi is a rapid adopter of technology, and we are excited about the rise of e-commerce and fintech in the Kingdom.”

In a recent report, KPMG Al Fozan & Partners said the 2019 outlook for fintech investment in the Kingdom remains positive, supported by a tech-savvy young population.

Additionally, Saudi Arabian Monetary Authority (SAMA), the Kingdom’s Central Bank, has launched “FintechSaudi” initiative and plans to set up “sandbox” regulatory environment in order to establish the country as a regional fintech hub.

Economy back on track

Last month, government data revealed Saudi Arabia’s economy grew by 3.59 percent year-on-year in the fourth quarter of 2018 at its fastest rate since early 2016 due to an expansion in the oil sector.

According to El Solh, Saudi Arabia is in a “recovery” phase and is reversing the slowdown that prevailed over the previous two years.

“The country is transiting from an austerity period, marked by short-term fiscal adjustment measures, into an expansionary phase, characterized by long-term transformational plans.

“Growth is coming back, and we expect renewed momentum over the next two years. Saudi Arabia today is on a transformational path and is resetting its economic engines, creating investment opportunities across a large set of underserved or new sectors,” the CEO noted.

No local REIT yet

El Solh ruled out plans to launch a Saudi-specific REIT or a fund, stating Gulf Capital does not plan to launch country-specific funds for now.

“As a pan GCC investment firm, we launch regional funds only. Saudi Arabia remains one of our largest exposures in all the funds we launch, given the size of the economy, large population and the country’s strategic importance," he explained.

Saudi Arabia witnessed launch of eight real estate investment trusts (REITs) last year, according to data compiled by Argaam. 

Write to Parag Deulgaonkar at parag.d@argaamplus.com