Haykala, IMAP’s Partner in Saudi Arabia Helps Clients Make the Most Of the Country’s Ambitious Vision 2030

The Growing Importance of Saudi Arabia

Saudi Arabia is the second biggest economy in Middle East after Turkey, with almost twice the GDP of the UAE which comes in third. In terms of population, with around 35,000 people, it is almost the same size as Canada. The Tadawul, its main stock exchange, is the largest market in the MENA region, and is among the top 10 capital markets in the world, with a market cap of $3.0 trillion.

Saudi Arabia’s Vision 2030: A Moment of Opportunity

In 2016, Saudi Arabia launched an ambitious roadmap for economic diversification, global engagement, and enhanced quality of life, called Vision 2030. In the years since its launch the country has undergone an economic and cultural transformation while also remaining true to itself. 

The market outlook is very positive as the government is focused on Vision 2030, which involves investment in different sectors to reduce the country’s dependence on oil, and a liberalization of Foreign Direct Investment.  The government has introduced many measures aimed at enhancing the business environment within the kingdom and making it more attractive to do business there, simplifying procedures and offering companies greater incentives.

Some of the business-friendly initiatives introduced include:

• In 2017, foreign investors were granted access to the Nomu, Saudi Arabia’s parallel market, on similar terms as local investors

• In 2019, the government introduced the FSI Initiative whereby existing limitations on foreign ownership of Saudi Arabian-listed companies for foreign strategic investors were eliminated

• In 2020, a cross-government ecosystem was established to support local and foreign company investment, providing market research, investment advisory, and government liaison capacities. 

• In 2021, the National Investment Strategy Initiative was launched to attract 1.6 trillion in foreign investment to the Kingdom by 2031 

• In 2023, Saudi Arabia introduced both the new Company Law and the Civil Transactions Law.  The first, was a comprehensive review of the regulation of all forms of entities aligned to the Vision 2030 Objectives and the second was a major milestone for companies as it greatly improves the regulation of contract law, providing increased certainty to individuals and companies

In addition, Saudi Arabia's sovereign wealth fund, the Public Investment Fund is pivotal in driving strategic investments. Its focus on both domestic and international opportunities broadens the scope of M&A activities and attracts global partnerships.

Trends in M&A Activity 

The government’s initiatives to privatize, attract FDI, and reduce reliance on oil have boosted M&A deal activity exponentially with deal activity rising to $23.8 billion in 2022. While global economic pressures caused a decrease in activity in 2023, the outlook for Saudi Arabia’s M&A market remains positive. 

Leading the charge in the first quarter of 2024, Saudi Arabia dominated the Middle East's Chemicals sector with $500 million in deals, accounting for 52.4% of the Kingdom's total M&A activity. This dominant position underscores the sector's strategic significance within the region's economic landscape.