Saudi Arabia unveils $1.78bn investments to advance AI, digital talent

RIYADH: Crowdfunding has emerged as one of the fastest-growing financial channels in Saudi Arabia, with platforms doubling in size annually and surpassing SR3 billion ($800 million) in capital last year, according to a top official. 

During a panel discussion at the Kingdom’s premier tech conference, LEAP 2025, Mohammed El-Kuwaiz, chairman of the Capital Market Authority, stated the financing landscape has also expanded significantly, moving beyond traditional bank loans and initial public offerings. 

“Whether we look at debt crowdfunding or equity crowdfunding, these platforms have actually been doubling in size every year for the past three years,” he said, highlighting their growing role in the country’s evolving financial ecosystem. 

Alongside crowdfunding, Saudi Arabia has introduced a range of new financing options to support businesses at different stages of growth. 

“We used to think of financing as one of two routes, either bank financing or IPOs. Today, that menu includes a plethora of investment and financing options,” El-Kuwaiz said. He highlighted that the country now has eight distinct investment and financing stages, with half of these introduced in recent years. 

The rapid rise of crowdfunding is part of a broader transformation in the Kingdom’s capital markets, which have expanded significantly since the Vision 2030 economic diversification plan was unveiled in 2016.

“The story of capital markets and how they serve entrepreneurs is very much running in parallel with the growth that we’ve been seeing in LEAP. We have moved from being the 25th or 26th largest market in the world to now being one of the top 10 largest markets in the world,” he said. 

The regulatory environment has also evolved to support business formation, with changes to the country’s corporations law allowing for multiple classes of shares and various investor rights. 

“Most startups and most founders require a degree of flexibility that our former corporations’ law did not allow them to serve,” El-Kuwaiz said, citing features such as drag-along and tag-along rights that were previously unavailable. 

Exit strategies for startups have expanded as well, with IPO activity accelerating and mergers and acquisition regulations being streamlined. 

“We moved from doing something like 10 listings a year to, in the last couple of years, doing in excess of 40 IPOs a year, and more than 50 percent of these listings are actually small and medium businesses. Many of them are actually venture-backed,” El-Kuwaiz said. 

However, mergers and acquisitions remain the most common exit strategy, with regulatory updates in 2017 and 2018 fueling a surge in M&A transactions. 

“As a result of that first rewrite, we have actually seen in the last five or six years more M&A activity than since we established the CMA 15 years ago,” he added. 

Saudi Arabia’s capital market transformation has also made it an increasingly attractive destination for international entrepreneurs. 

“We have seen more and more from outside of the region seriously considering relocating to Saudi Arabia because of the market, because of these regulatory developments, and this potential to exit,” the CMA said.

Debt markets have also played a crucial role in financing businesses, surpassing equity markets in capital raised since 2021. 

El-Kuwaiz added that since then, “our debt capital market has been raising more capital for businesses and governments than the equity capital market, both in primary and secondary.” 

He also underlined that Saudi Arabia is developing its private credit sector alongside its debt market, with expectations that the latter will grow faster in the near term due to its liquidity and traceability advantages. 

El-Kuwaiz emphasized that the Kingdom’s efforts to enhance business formation, financing, and exit opportunities are creating a model that extends beyond national borders. 

“When we first started, we thought that solving the entrepreneurial problem was a Saudi-specific problem,” he said, adding: “But as we have evolved, we recognize that if we solve this problem, we can actually solve this problem for all entrepreneurs — whether in Saudi, the Gulf region, or the broader Middle East.”

RIYADH: Saudi Arabia’s Tadawul All Share Index ended Tuesday’s trading in red, as it shed 47.40 points or 0.38 percent to close at 12,424.32. 

The total trading turnover of the benchmark index was SR6.36 billion ($1.70 billion), with 69 stocks advancing and 155 retracting. 

Nomu, Saudi Arabia’s parallel market, gained 143.56 points to close at 31,570.32 while the MSCI Tadawul Index edged down by 0.46 percent to 1,543.86. 

The best-performing stock on the main market was Raoom Trading Co. The firm’s share price soared by 5.59 percent to SR189.

The share price of Fawaz Abdulaziz Alhokair Co. increased by 5.38 percent to SR15.68. 

Zamil Industrial Investment Co. also saw its stock price climbing by 4.91 percent to SR36.35. 

Conversely, Tihama Advertising and Public Relations Co.’s share price declined by 3.4 percent to SR16.50. 

On the parallel market, Mohammed Hadi Al Rasheed and Partners Co. was the top gainer, with its share price increasing by 6.98 percent to SR138.

On the announcements front, Saudi Electricity Co. said that it commenced issuing a dollar-denominated, senior secured sukuk on Feb.11 with the offering set to run until Feb.12. 

SEC, in a statement to Tadawul, said that the sukuk has a minimum subscription level of $200,000, while the final issuance size will be determined based on market conditions. 

The company added that the offering is being conducted through a special-purpose vehicle and is available to qualified investors within the Kingdom and abroad. 

SEC’s share price dropped by 0.46 percent to SR17.22. 

Hedab Alkhaleej Trading Co. has set the price range for its initial public offering on Nomu at SR48 to SR52 per share, the firm’s financial adviser and lead manager Yaqeen Capital said. 

According to a Tadawul statement, the offering comprised of 800,000 ordinary shares representing 10.67 percent of the issued share capital of the company after the IPO. 

The book-building period for qualified investors will run on Feb. 16-20.