- Advertisement -spot_img
Thursday, January 20, 2022

Riyadh Futures Mineral Forum to explore the potential of Saudi mining industry

Saudi Arabia’s ‘phenomenal growth’ set to cement position as M&A leader in 2022

RIYADH: Saudi Arabia has become one of the most attractive markets for international companies seeking new mergers and acquisitions, and it is set to maintain its position in 2022.

The country’s growth rate in the third quarter was 6.8 percent. This is due to rising world demand for crude, ambitious Saudi Vision 2030 targets, cutting the Kingdom’s dependence on hydrocarbon sales through the development of non-oil fields, as well as progress in fighting the COVID pandemic.

This has helped set up Saudi Arabia for a steady increase in mergers and acquisitions in the coming year.

“The Saudi market, along with the UAE and Egypt, is probably one of the most active M&A markets in the region,” said Fikri Younis, Riyadh-based partner at Lumina Capital Advisors.

Economist Robert Mogielniki of the Arab Gulf State Institute in Washington outlined that the most obvious places to see M&A activity in Saudi Arabia are energy and technology locations.

“Saudi Arabia has a comparative advantage in the energy sector and is really looking to monetize its energy assets. Technology firms are thriving globally, and Saudi Arabia is pushing to become a global technology hub,” he said.

According to Yunus, Saudi Arabia is seeing M&A activity in all sectors with a focus on social infrastructure including health, education and logistics – tourism, entertainment and sports, environmental, social and governance investments and green energy.

There is also significant action in technology that acts as a enabler for other sectors, such as healthtech, edutech and fintech.

QuickFact

The country’s growth rate in the third quarter was 6.8 percent. This is due to rising world demand for crude, ambitious Saudi Vision 2030 targets, cutting the Kingdom’s dependence on hydrocarbon sales through the development of non-oil fields, as well as progress in fighting the COVID pandemic.

The acquisition of a 49 percent stake in Aramco’s oil pipeline company by a consortium led by EIG Global Energy was the biggest announced transaction this year; The acquisition of Aramco’s portfolio of gas assets by US-based Air Products and ACWA Power, and the acquisition of a 50 percent stake in Saudi National Petrochemical Company by Saudi Industrial Investment Group.

Tourism is expected to account for more than 10 percent of Saudi Arabia’s GDP by 2030 through NEOM – including a major entertainment and sports project called Qidia as well as a nature reserve and heritage sites on islands on the Red Sea The city of the $500bn future.

The Kingdom plans to invest more than $1tn in the tourism sector over the next 10 years.

For Habib Aun, partner at Broadgate Advisors, if one looks at the rankings by deal value, energy and materials remains the most bullish sector by far, driven by strategic acquisitions that often involve government entities such as ARAMCO. Huh.

However, given the deal count rather than deal size, there is a huge demand for properties in the consumer, healthcare, education and ICT sectors from both strategic as well as financial investors.

“Saudi Arabia has always been one of the main M&A markets in the region and is driven by its large population, several government initiatives and the recent correction in oil prices,” Aun says.

Experts estimate that in 2021, $44 billion was announced to the Kingdom, compared to $75 billion for the entire Middle East and North Africa region, including Saudi Arabia.

Read Also:  Oil slips to 78 78 as sources say OPEC + weighs more output growth

The acquisition of a 49 percent stake in Aramco’s oil pipeline company by a consortium led by EIG Global Energy was the biggest announced transaction this year; According to Aun, the acquisition of Aramco’s portfolio of gas assets by US-based Air Products and ACWA Power and the acquisition of a 50 percent stake in Saudi National Petrochemical Company by Saudi Industrial Investment Group.

Saudi British Bank, an affiliate of HSBC Holdings, also completed its merger with Alawwal Bank. The year also saw the merger of the national commercial bank and Samba Financial Group under the name of Saudi National Bank. With a combined equity of SR120 billion ($31.96 billion), SNB will account for a market share of 25 percent.

In addition to those large deals in the energy and materials sectors, there has been notable mid-cap deal activity including the sale of Naturepack Beverage Packaging to Norway-based Elopak; HSBC’s asset management business to Alawwal Invest; Saudi Enaya Cooperative for Amana Cooperative, and; Fourth milling company for a consortium of Saudi strategic agricultural investors.

In the field of education, King’s College Riyadh – a branch of Dorset King’s College – became the first British boarding school to be established in Saudi Arabia. Additionally, Saudi Arabia’s Tourism Development Fund and London-based hospitality company Ennismore set up a $400m fund to bring Ennismore’s lifestyle brands to the kingdom.

“Mega deals like the Samba-NCB merger as well as the PIF takeover of Newcastle United generated all the hype, however, many private deals of all sizes are happening under the radar,” says Yunus.

Yunus says that without a doubt Vision 2030 is the main driver of the flurry of M&A activity in Saudi Arabia.

“One of the main pillars of Vision 2030 is the localization of information. So we have seen many sub-industries across the broad manufacturing spectrum benefiting from government initiatives – chemicals and materials, pharmaceuticals, etc. Other core sectors are expected to benefit. Vision 2030 has infrastructure – including telecommunications, education, tourism – including F&B, and healthcare where investment is needed to support anticipated economic growth. The impact of COVID is primarily in the H1 of 2020 But as is the case globally, most sectors have improved well into 2021,” says Aun.

M&A activity in Saudi Arabia is both inbound and cross-border, agree experts.

An example is the $10 billion deals of Saudi Arabian companies with their Omani counterparts.

“Within Saudi, the Investor and Family Office is reviewing their portfolios and disinvesting from non-core assets, to expand core assets,” says Yunus. To capture the opportunities being presented as a result of Vision 2030.

“International investors are investing in Saudi to benefit from the unprecedented growth, especially with the challenges that many are facing in their home countries: COVID, supply chain challenges, inflation, etc. Local investors who are making outbound investments are investing in sequence. To bring expertise and capabilities from abroad to Saudi Arabia.”

For Aun, the forecast for M&A activity in the Kingdom is upbeat, driven by current oil price levels and the government’s continued efforts to modernize the country and establish Riyadh as the region’s financial capital.

,

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
Latest news
Related news
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here