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Saudi Arabia leading region’s transformative journey 

Saudi Arabia leading region’s transformative journey 
Saudi Venture Capital’s strategic initiatives have positioned Saudi Arabia as a leader in venture investments within the MENA region for the first time in 2023. (SPA)
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Updated 01 October 2024
Nour El-Shaeri
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Saudi Arabia leading region’s transformative journey 

Saudi Arabia leading region’s transformative journey 
  • SVC makes significant strides in shaping private investment landscape
Updated 01 October 2024
Nour El-Shaeri
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CAIRO: A wave of venture capital funding has washed over the Middle East and North Africa region, prompting transformative change in the entrepreneurial landscape.

Saudi Arabia’s government is leading the shift through a subsidiary of the SME Bank, part of the National Development Fund.  

The Kingdom’s Saudi Venture Capital has made significant strides in shaping the private investment landscape, deploying finance across 40 investment funds and over 700 startups and small and medium-sized enterprises.  

This was highlighted in the latest Impact Report issued by SVC, which detailed its contributions since its inception in 2018. 

The document revealed that SVC’s total investments have reached SR2.6 billion ($693.1 million), with the overall impact of these, including partner commitments, estimated at around SR13.6 billion.  

These investments span various sectors critical to economic diversification, such as e-commerce, fintech, healthcare, educational technologies, transportation, and logistics. 

“SVC plays a crucial part in stimulating the private VC investment to sustain and foster the steady growth of the VC ecosystem in the Kingdom,” Nabeel Koshak, CEO of SVC, said.  

“SVC’s strategy, since its inception in 2018, contributed to increasing the number of investors in Saudi startups, encouraging existing and new financial companies to establish VC funds, and motivating regional and global funds to invest in Saudi startups,” Koshak stated. 

“Accordingly, the funding deployed into Saudi Arabian startups grew 21 times to a record-high of $1.4 billion in 2023 versus $65 million in 2018, the year SVC was launched,” he added. 

Significantly, SVC’s strategic initiatives have positioned Saudi Arabia as a leader in venture investments within the MENA for the first time in 2023.  

This milestone reflects the broader economic and financial sector evolution under Saudi Vision 2030, aimed at enhancing the national economy. 

Saudi Arabia’s Penny Software closes undisclosed pre-series A round 

Closing its pre-series A funding round, Saudi Arabia’s Penny Software raised an undisclosed sum from Iliad Partners, joined by GSI and US-based Knollwood Investments, alongside existing investors such as Dallah Investment, Hambro Perks Oryx Fund, Class 5 Global, Altuwajiri family fund, and strategic angel investors.  

Founded in 2020 by Iyad Al-Dalooj, Majid Al-Dalooj, and Mohamad Ibrahim, Penny Software is a business to business Software-as-a-Service procurement startup that digitizes the entire source-to-pay process, thereby enhancing spend efficiency, governance, and compliance. 

“This investment from Iliad Partners, alongside the continued support from our existing and new investors, represents a significant vote of confidence in Penny Software’s vision and our team’s ability to execute,” Iyad Al-Dalooj, the CEO, said. 

“We are excited to leverage this partnership to scale our operations, enhance our product offering, and solidify our position as a leader in the procurement software industry. The future of procurement is here, and Penny Software is at the forefront of this transformation,” he added. 

This new capital infusion is poised to fuel Penny’s ambitions for regional and global expansion.  

This follows a successful $5 million seed funding round in 2021, led by Outliers Venture Capital with participation from Wamda, Shorooq Partners, Hambro Perks ORYX Fund, Class 5 Global, and strategic angel investors.  

Penny Software aims to leverage this investment to further enhance its platform capabilities and broaden its market reach, reinforcing its position in the competitive SaaS industry. 

The company claims that it is set to manage a gross transaction value of over $1 billion this year, and ease procurement for thousands of companies globally. 

“Saudi Arabia is an economy that is undergoing a major transformation in which technology is playing a key role. This is our first investment in the Kingdom, and we plan to invest a significant portion of our fund in this market, supporting strong founders on their journey from the pre-series A stage and onwards,” Christos Mastoras, founder and managing partner of Iliad Partners, stated   

UAE’s DocsInBox closes $500k in a funding round 

UAE’s e-invoicing and procurement startup DocsInBox closed a $500,000 funding round from angel investors to boost its presence. 

Founded by serial entrepreneurs Leonid Dovbenko and Stanislav Seleznev,  DocsInBox significantly streamlines invoicing and procurement processes, saving up to 1 million hours each month, the company claimed.  

The platform enables purchasing agents to place orders in just three clicks, while accountants can complete tasks in 13 seconds that previously took 300 seconds.  

By automating procurement, DocsInBox reduces manual labor by 15 percent, operational costs by 5 percent, and food costs by 8 percent.  

UAE’s U-topia secures $850k in funding round 

UAE-based Web3 services provider U-topia has secured $850,000 in funding from GDA Capital. 

Established in 2021 by Jérémy Mahieu and Nicolas Prévost, U-topia operates as a Web3 entertainment company that merges global intellectual property licensing in GameFi, artificial intelligence music, and video entertainment supported by non-fungible token provenance.  

The newly acquired investment is earmarked for the development of advanced features and technologies on the U-topia platform, aiming to enhance its offerings in the dynamic Web3 landscape. 

Nigeria’s VC firm Verod-Kepple Africa Ventures closes $60m fund 

Nigeria-based VC firm Verod-Kepple Africa Ventures has concluded a final close of $60 million for its pan-African VC fund, led by existing investors and new investors, including SCM Capital from Nigeria and institutional investors from Japan, including Taiyo Holdings and C2C Global Education Japan. 

Formed in 2021 as a joint venture between Kepple Africa Ventures and Verod Holdings, VKAV is led by partners Satoshi Shinada, Ryosuke Yamawaki, and Ory Okolloh. 

The fund aims to bridge the funding gap for African startups, especially for companies moving to series A and B stages. 

Egypt’s VC firm Beltone teams up with UAE’s CI Venture to manage a $30m fund 

Egypt’s Beltone Venture Capital, under Beltone Holding, has teamed up with CI Venture Capital from UAE’s Citadel International Holdings to manage a $30 million fund aimed at nurturing fast-growing startups.  

This collaborative fund is set to invest in pre-seed and seed funding rounds of innovative tech startups across the MENA region while also continuing to support standout performers within its existing portfolio. 

In recent months, the fund has actively begun deploying capital, finalizing investments in several startups, including Bosta, Trella, Qlub, and ariika.  
 

Topics: startups VENTURE CAPITAL

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IMF hails Oman’s economic policies amid 6.2% budget surplus 

IMF hails Oman’s economic policies amid 6.2% budget surplus 
Updated 25 sec ago
Nour El-Shaeri
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IMF hails Oman’s economic policies amid 6.2% budget surplus 

IMF hails Oman’s economic policies amid 6.2% budget surplus 
Updated 25 sec ago
Nour El-Shaeri

RIYADH: Oman achieved a 6.2 percent budget surplus and a 2.4 percent current account gain in 2024, driven by prudent fiscal policies, high oil prices, and nonhydrocarbon export growth. 

In its 2024 Article IV consultation, the International Monetary Fund attributed these figures to effective economic management.

Despite higher social spending under a new protection law, the nonhydrocarbon primary deficit as a share of nonhydrocarbon gross domestic product remained stable, highlighting the government’s commitment to financial discipline.    

Government debt as a percentage of GDP also declined further, reaching 35 percent in 2024, marking continued improvement in Oman’s economic fundamentals.   

The findings align with the broader resilience observed in the Gulf Cooperation Council region, with an IMF report released in December showing GCC economies have successfully weathered recent shocks, supported by strong nonhydrocarbon growth and ongoing reforms.  

The latest analysis from the financial agency show that Oman’s economic resilience has been recognized internationally, with its sovereign credit rating recently upgraded to investment grade.

Additionally, the banking sector remains sound, with profitability recovering to pre-pandemic levels, ample capital and liquidity buffers, and strong asset quality.    

While overall economic growth was tempered by OPEC+ oil production cuts, the IMF noted that Oman’s economy grew by 1.2 percent in 2023 and accelerated to 1.9 percent year on year in the first half of 2024.     

This expansion was primarily supported by a 3.8 percent increase in nonhydrocarbon sectors such as construction, manufacturing, and services during the same period, it added.    

Nonhydrocarbon activity is expected to remain a key driver of medium-term growth, supported by significant private sector investments.   

The nation predicts a modest 2.7 percent growth in GDP this year, while the IMF projections point to a higher 3.1 percent expansion.   

The country’s Inflation has continued to ease, declining to 0.6 percent during the first 10 months of 2024, down from 1.0 percent in 2023. This decrease reflects a contraction in transport prices and a moderation in food inflation.   

The IMF noted that Oman’s economic outlook is balanced but faces external and domestic risks. On the downside, global geopolitical tensions and a potential economic slowdown, particularly in China, could impact trade, tourism, and foreign direct investment.    

Lower-than-expected oil prices amid a potentially oversupplied energy market in 2025 also pose risks to the fiscal and external positions. It added.    

Domestically, delays in reform implementation and uncertainty around the global energy transition could hinder Oman’s diversification efforts.   

On the upside, Oman could benefit from higher oil prices, faster-than-expected global economic growth, and accelerated reforms and investments under Oman Vision 2040.   

The reform agenda includes initiatives to drive nonhydrocarbon growth, improve fiscal sustainability, and attract foreign investments.   

Oman’s reform efforts under Vision 2040 aim to reduce the economy’s reliance on hydrocarbons and foster private sector-led growth.    

The government has been executing sizable private sector investments and advancing structural reforms to expand the role of nonhydrocarbon sectors in the economy.    

Over the medium term, nonhydrocarbon activity is expected to drive growth, supported by policy measures and a steady inflow of private capital.   

The IMF’s report from December claimed regional conflicts had limited spillover effects, meaning the GCC maintained a favorable outlook — with the easing of oil production cuts and expansion in natural gas expected to further bolster the hydrocarbon sector.  

It was also noted that inflation across the region remains stable at low levels, and external buffers are sufficient despite narrower current account balances.  

Topics: International Monetary Fund (IMF) Oman oman economy

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Saudi Arabia’s capital markets surge with $274bn raised in 5 years, fueled by Vision 2030 growth: S&P Global

Saudi Arabia’s capital markets surge with $274bn raised in 5 years, fueled by Vision 2030 growth: S&P Global
Updated 16 min 19 sec ago
MIGUEL HADCHITY 
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Saudi Arabia’s capital markets surge with $274bn raised in 5 years, fueled by Vision 2030 growth: S&P Global

Saudi Arabia’s capital markets surge with $274bn raised in 5 years, fueled by Vision 2030 growth: S&P Global
  • Saudi issuers have raised more than $130 billion through US dollar-denominated issuances
  • Market conditions remain favorable, with falling interest rates providing supportive dynamics, S&P said
Updated 16 min 19 sec ago
MIGUEL HADCHITY 

RIYADH: Saudi Arabia’s capital markets are experiencing significant growth, with issuers raising over $130 billion in the past five years as the Kingdom accelerates financing for its Vision 2030 plan.

The Capital Market Authority’s 2024-2026 strategy aims to promote investment, attract global interest, and support economic diversification, advancing the nation’s financial sector. 

According to a report from S&P Global, Saudi issuers, including the government and private sector, have raised more than $130 billion over the past five years through US dollar-denominated issuances.

“This comes on top of the $144 billion that they raised locally in Saudi riyal during the same period, with the implementation of Saudi Vision 2030 explaining part of this flurry,” the US-based credit rating agency said.

While the government makes up about 60 percent of these issuances, Vision 2030 has also opened significant opportunities in the non-oil economy and banking system.

Despite the rise in external leverage, market conditions remain favorable, with falling interest rates providing supportive dynamics, S&P said.

“We still expect leverage to remain manageable in our base-case scenario, with private-sector debt to GDP (gross domestic product) staying below the 100 percent mark in the next 12-24 months,” the agency added.

The current market environment is favorable for issuers, with declining interest rates and supportive financial conditions providing a conducive backdrop for sustained capital raising. This trend will continue as the Kingdom pushes ahead with large-scale projects and economic diversification efforts.

Residential mortgage-backed securities market on the horizon

One of the key factors to watch over the next one-to-two years is the potential establishment of a residential mortgage-backed securities market in Saudi Arabia. 

The credit rating agency said that at the end of September, “banks were sitting on more than $175 billion of mortgages that are predominantly at fixed rates and have short-term funding sources, primarily in the form of domestic deposits.”

If interest rates continue to decline, these mortgages could become more attractive for secondary market transactions. The ability to securitize and sell them would allow banks to move assets off their balance sheets, freeing up capital for further lending and investment in Vision 2030 initiatives. 

“This assumes that the legal hurdles relating to the issuance of RMBS are resolved, or at least the risks are floored at a level that would attract local and international investors’ interest,” S&P said.

The Saudi Real Estate Refinance Co., which has an A-/Positive rating, is expected to play a key role in facilitating RMBS market development. 

Direct market issuances could emerge as another avenue for mortgage-backed securities, potentially unlocking significant financial capacity for banks.

Topics: Saudi Arabia S&P Global  Saudi Capital Market Authority Saudi capital market

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PIF launches $4bn 2-part bond

PIF launches $4bn 2-part bond
Updated 59 min 45 sec ago
Nirmal Narayanan
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PIF launches $4bn 2-part bond

PIF launches $4bn 2-part bond
Updated 59 min 45 sec ago
Nirmal Narayanan

RIYADH: Saudi Arabia’s Public Investment Fund has launched a $4 billion two-part bond, Arab News has been told.

The sovereign wealth fund confirmed that it had sold $2.4 billion of five-year debt instruments at 95 basis points over US Treasuries and $1.6 billion of nine-year securities at 110 basis points over the same benchmark.

The move comes just weeks after PIF closed its first Murabaha credit facility, securing $7 billion in funding, in what was a key step in the fund’s plan to raise capital over the next several years. 

PIF, widely recognised to be Saudi Arabia’s vibrant economic engine, is currently spearheading the nation’s economic diversification efforts, aligned with the goals outlined in Vision 2030. 

PIF manages $925 billion in assets, and is set to increase that to $2 trillion by 2030, a report from monitoring organization Global SWF forecast earlier in January.

Moody’s upgraded the rating of PIF in November, raising it from A1 to Aa3 with a stable outlook, reaffirming the fund’s strong financial position.

The US-based agency gives Aa3 for entities with high quality, low credit risk, and the best ability to repay short-term debts. 

According to Moody’s, the upgrade of PIF’s long-term issuer rating from A1 reflects strong credit linkage between the sovereign wealth fund and the Kingdom’s government. 

The Murabaha credit facility is supported by a syndicate of 20 international and regional financial institutions. 

In a statement at the time of its annoucement, PIF added that the closing of the Murabaha credit facility financing complements the fund’s successful sukuk issuances over the past two years, underscoring the body’s strong financial position and its best-practice approach to debt financing.

In August, PIF obtained a $15 billion revolving credit facility for general corporate purposes from a diverse global syndicate of 23 financial institutions from the US, Europe, and the Middle East as well as Asia. 

In a press statement, the wealth fund said that this credit facility is offered for an initial period of three years and is extendable for up to two additional years. 

A revolving loan is one that can be drawn, repaid and drawn again during the agreed lending period.

Topics: Public Investment Fund (PIF)

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Qatar drafting new laws aimed at boosting foreign investment

Qatar drafting new laws aimed at boosting foreign investment
Updated 23 January 2025
Reuters
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Qatar drafting new laws aimed at boosting foreign investment

Qatar drafting new laws aimed at boosting foreign investment
  • Qatar plans new bankruptcy, PPP, and commercial registration laws
  • Qatar aims for $100 billion FDI by 2030
Updated 23 January 2025
Reuters

DOHA: Qatar plans to introduce three new laws as part of a sweeping review of legislation designed to make the Gulf Arab state more attractive to foreign investors, the new minister of commerce and economy told Reuters.
Sheikh Faisal bin Thani said in an interview that Qatar plans to introduce new legislation including a bankruptcy law, a public private partnership law and a new commercial registration law.
“We’re looking at 27 laws and regulations across 17 government ministries that affect 500-plus activities,” he said, describing the legislative review.
Sheikh Faisal said he expects the new bankruptcy and public private partnership laws to be drafted before the end of March.
Qatar, one of the world’s top exporters of liquefied natural gas, has set a cumulative target of attracting $100 billion in foreign direct investment (FDI) by 2030, according to the latest version of its national development strategy published last year.
But it has a long way to go to meet that target, and FDI inflows have significantly lagged behind neighboring Saudi Arabia and the U.A.E.
Saudi Arabia, which also has a target to attract $100 billion in FDI by 2030 as part of its national investment strategy, saw FDI inflows of $26 billion in 2023, after a change to how it calculates FDI, while the Emirates, the Gulf region’s commercial and tourism hub, attracted just over $30 billion according to the UN’s trade and development agency.
In contrast, Qatar’s FDI inflows in 2023 were negative $474 million, down from $76.1 million in 2022. Negative FDI inflows indicate that disinvestment was more than new investment.
While Qatar does offer similar incentives to foreign investors as its neighbors, such as a favorable tax environment, free zone facilities and some long term residency schemes, the U.A.E. and Saudi Arabia are considered far ahead in terms of regulatory reforms and business friendly laws.
Qatar’s new laws also come as part of the Gulf Arab state’s efforts to activate its private sector and transition away from government-funded growth.
Sheikh Faisal joined the government in November after serving at Qatar’s $510 billion sovereign wealth fund, the Qatar Investment Authority, most recently as chief investment officer for Asia and Africa.

Topics: Qatar Foreign Direct Investment (FDI) qatar economy

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Saudi Arabia’s non-oil exports surge 19.7%: GASTAT 

Saudi Arabia’s non-oil exports surge 19.7%: GASTAT 
Updated 23 January 2025
Nirmal Narayanan 
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Saudi Arabia’s non-oil exports surge 19.7%: GASTAT 

Saudi Arabia’s non-oil exports surge 19.7%: GASTAT 
Updated 23 January 2025
Nirmal Narayanan 

RIYADH: Saudi Arabia’s non-oil exports surged 19.7 percent year on year in November to reach SR26.92 billion ($7.18 billion), bolstering the Kingdom’s efforts to diversify its economy. 

According to the General Authority for Statistics, chemical products led the growth, accounting for 24 percent of total non-oil exports, followed by plastic and rubber products, which made up 21.7 percent of shipments. 

Building a robust non-oil sector is a key goal of Saudi Arabia’s Vision 2030 program, which seeks to transform the Kingdom’s economy and reduce its reliance on oil revenues, with  Minister of Economy and Planning Faisal Al-Ibrahim revealing in November that these activities now constitute 52 percent of the  gross domestic product. 

In its latest report, GASTAT said: “The ratio of non-oil exports (including re-exports) to imports increased to 36.6 percent in November 2024 from 34.8 percent in November 2023. This was due to a 19.7 percent increase in non-oil exports and a 13.9 percent increase in imports over that period.” 

The Kingdom’s total merchandise exports fell 4.7 percent year on year in November, weighed down by a 12 percent drop in oil exports. This decline reduced the share of oil exports in total shipments to 70.3 percent, down from 76.3 percent a year earlier, signaling progress in Saudi Arabia’s economic diversification. 

GASTAT reported that China remained Saudi Arabia’s largest trading partner in November, with exports to the Asian nation totaling SR13.53 billion. 

Other key destinations for exports included Japan with SR8.93 billion, the UAE with SR8.75 billion, and India with SR8.74 billion. 

Saudi Arabia’s imports rose 13.9 percent year on year in November, reaching SR73.65 billion. However, the merchandise trade surplus declined by 44.3 percent during the same period, falling to SR16.89 billion. 

China remained the dominant supplier of goods to the Kingdom, accounting for SR20.11 billion of imports, followed by the US at SR7.52 billion and the UAE at SR3.90 billion. 

King Abdulaziz Sea Port in Dammam emerged as the top entry point for imports, handling goods valued at SR18.19 billion, representing 24.7 percent of total inbound shipments. 

Topics: General Authority for Statistics (GASTAT) Saudi exports non-oil exports

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