Saudi deal flow to increase as wealth fund seeks cash
As the Saudi Arabian sovereign wealth fund seeks to raise capital for its ambitious projects, deal activity is expected to pick up this year, Bloomberg reported citing a top banker at the securities arm of the country’s biggest lender.
In 2024, the kingdom’s sovereign wealth fund is anticipated to become more active in the debt and equity capital markets as the Public Investment Fund (PIF) seeks to finance initiatives to restructure the Saudi economy, SNB Capital’s Head of Investment Banking Zaid Ghoul stated.
“The closer we get to 2030 the faster it will get,” he stated.
In preparation for a spike in transactions, the bank expanded its team of advisors specialising in mergers and acquisitions, a move that has proven profitable over the past year, according to Ghoul. Moreover, SNB Capital is providing advice on three more acquisitions that it hopes to finalise in the upcoming months, he added.
SNB Capital was the top financial adviser on Saudi IPOs last year behind the local unit of HSBC Holdings Plc. A few of the largest transactions in the kingdom during the past year were also advised on by it, such as the PIF’s $3.3 billion purchase of Saudi Basic Industries Corp.’s steel division.
“We closed 18 transactions last year,” he said, and “have a healthy backlog of deals we expect to close this year.”
Over the last two years, Saudi Arabia and the United Arab Emirates have become burgeoning markets for selling new shares, and Ghoul predicted that the trend would continue. The Middle East experienced one of its best years ever in 2023, although IPOs worldwide fell to their lowest level in over a decade, and deals continued despite the Israel offensive against Gaza.
Moreover, Ghoul cited a recent spike in share trading and said, “Momentum is great, and all the indications so far for 2024 are excellent.”
According to data released by the exchange, over 8 billion shares were traded on the Saudi stock exchange in January—nearly four times as many as there were a year earlier. It’s encouraging more companies to get ready for initial public offerings, according to Ghoul.
