Private Equity in Saudi Arabia

Always a source of capital - now a place for deals.

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camels and sandThe Financial Times reports: Private equity fund managers have long courted Saudi Arabia’s wealthiest families to fund overseas investments. Bu, as the oil-rich country’s economy expands and liberalisation takes hold, private equity firms have begun to discern opportunities inside the kingdom.

Government officials list the country’s economic advantages, starting with its natural wealth, and point to strong domestic demand, the presence of the region’s largest stock market and a burgeoning young population. But only three significant private equity deals were completed in Saudi Arabia last year, compared with 10 in the United Arab Emirates, says Zawya, a data provider.

Executives blame the lack of activity on unrealistic valuations by family businesses, stock market volatility, tight credit and risk aversion after the global financial crisis.

Yet Ahmed Heikal, chairman of Citadel Capital , an Egypt-based private equity firm, expects at least $20bn in transactions in Saudi Arabia over the next five years. Mining concessions, microfinance, healthcare and education are among the most attractive sectors for investors, he says. Read the full article here.

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