Saudi Arabia's Private Capital Shift: Domestic Investment Surges as Vision 2030 Nears Realization

LONDON- beth - March 04, 2024 – In an illuminating new report from Preqin, the leading authority in alternative investment data, a significant shift in Saudi Arabian private capital investment patterns has been highlighted, showing a robust move towards domestic growth and economic diversification in line with the Kingdom's ambitious Vision 2030.

The report, titled "The Rise of Private Capital in Saudi Arabia: Preqin Territory Guide," outlines a remarkable sixfold increase in domestic deal counts from 2018 to 2023, underscoring a burgeoning interest in local investment opportunities over foreign ones. This shift is primarily driven by the Saudi government, investors, and corporates who are actively fostering partnerships with fund managers to inject knowledge, infrastructure development, and co-investment into the local economy.

A central aspect of this transformation is the alignment with Saudi Vision 2030, a strategic framework aimed at reducing the Kingdom's dependence on oil and diversifying its economy. The private markets have become a crucial element of this transition, with fund managers playing a new role in advancing economic projects domestically.

David Dawkins, the lead author of the report, notes, "In 2024, Saudi Arabia is leveraging private capital to empower the country's emerging entrepreneurial class, gearing up for a future beyond oil." This reflects in the balanced number of private equity and venture capital deals completed domestically compared to those abroad, showcasing a growing confidence in home-grown enterprises.

The momentum of domestic investment is further evidenced by the dramatic increase in the number of Saudi-based fund managers, which has risen by 213% since 2018. Additionally, the venture capital scene in the Kingdom has been notably resilient, with the aggregate deal value reaching $1.02 billion in 2023 despite a global downturn.

The report also highlights the significant rise in venture capital co-investments and the emergence of notable deals such as Tamara, the Kingdom's first fintech unicorn. The number of active managers focused on Saudi Arabia has more than doubled, indicating a robust pipeline for future investments.

As Saudi Arabia continues to navigate its post-oil future, the findings from Preqin's report suggest a promising horizon for the Kingdom's private capital landscape, marked by strong domestic investment, entrepreneurial growth, and strategic partnerships.