Vision 2030 is well underway, and Saudi Arabia’s transformation is progressing rapidly, with notable achievements in its economy. Among the G20 nations, Saudi Arabia experienced the highest economic growth rate of 8.7% GDP in 2022¹. Despite a global economic slowdown, the country is expected to sustain growth throughout 2023 and beyond. Additionally, it was announced that Saudi Arabia would be hosting the 2030 Expo in Riyadh, which is set to boost further investment in the Kingdom.

This impressive economic performance is supported by the government’s efforts to privatize, attract foreign direct investment, and reduce dependence on oil². In 2022, M&A deal activity soared to over $23.8 billion, marking a staggering 125% year-on-year increase. The surge in investment and expansion activity can be attributed to the sovereign wealth fund (PIF) and family-owned corporations, which accounted for 60% of all M&A deals in 2022.

To provide a clearer picture of the M&A landscape, the following illustrations depict the breakdown of deal types and sector classifications for the year 2022.

PAVING THE WAY FOR M&A ACTIVITY

Since the introduction of Vision 2030 in 2016, the Saudi government has implemented a series of transformative initiatives aimed at enhancing the business environment within the Kingdom. These initiatives have focused on streamlining regulations, simplifying procedures, and offering greater incentives to companies, thereby improving the attractiveness and ease of doing business in the Kingdom.

Such notable initiatives included:

• 2017 Nomu Initiative: Foreign investors were granted direct access to the Kingdom’s parallel market, providing them with similar terms as local investors.

• 2019 FSI Initiative: The “Instructions for Foreign Strategic Investors’ Ownership in Listed Companies” (FSI Instructions) came into effect, thereby eliminating the existing limitations on foreign ownership in Saudi-listed companies for foreign strategic investors.

• 2020 MISA Initiative³: The establishment of a cross-government ecosystem aimed at supporting both local and foreign companies throughout their investment journey, providing market research, government liaison capabilities and investment advisory.

• 2021 National Investment Strategy Initiative: This initiative aims to attract $1.6 trillion in foreign investment into the Kingdom by 2031.

Commercial registration data obtained from the ‘Invest Saudi’ platform provides compelling evidence that the steps taken by the Saudi government have been successful in attracting more firms to the local market, with annual growth steadily increasing since 2017⁴.

Commercial Registration Growth

These developments, coupled with Saudi Arabia’s privatization program, aim to privatize 16 sectors in the Kingdom, including the utilities, transport, healthcare, and education sectors. This initiative paves the way for further M&A growth and greater FDI inflows into the country as Saudi Arabia also prepares to host the 2030 Expo and bid for the 2034 FIFA World Cup.

Saudi Arabia’s M&A outlook remains positive, positioning the country as one of the most attractive investment destinations worldwide due to the abundance of liquidity in the market, strong investment appetite from Saudi family-owned businesses, and its strategic location between three continents. This advantageous positioning enables the Kingdom to serve as a pivotal investment gateway to key emerging markets in Asia and Africa.