King Abdullah Economic City

Report
Focus Session on Country Investment
Prospects
Saudi Arabia as destination and source of asset management capital
Abdullah M. Alfouzan
Chairman, The Investor for Securities Co.
Riyadh, Saudi Arabia
April 2014
Saudi Arabia, a destination for global capital
$925
$905
$885
$865
$845
$825
•
Approaching $1 trillion GDP
•
Consistent positive GDP growth
•
Gross national savings among highest in the world
•
Highly urbanized, young population
•
$717 billion foreign currency reserves
•
> $120 billion inward Foreign Direct Investment, 2008-2011
•
An ancient culture, but also thoroughly modern
GDP
2011
GDP
The Investor for Securities Co.
2012
2013
2011
2012
2013
8.6%
5.1%
3.6%
BASIC DATA
Population
27 million
% population 0-24 years
47%
Urbanization
82%
GDP per capita
$31,300
Daily value of crude exports
> $650 million
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Saudi capital markets, young and growing
•
Capital Market Law, 2003
•
Capital Market Authority (CMA), 2005
•
CMA enforces a clear line between banking & investments
•
Tadawul, national stock market,
> $510 billion total market capitalization
•
More than 11 million investors, 159 traded companies, growing sukuk market
•
Tadawul up:


11% YTD,
33% YoY (31 March 2014)
The Investor for Securities Co.
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Saudi financial intermediaries
•
83 active CMA-licensed investment companies



10 linked to domestic Saudi banks
19 to foreign banks
13 to foreign investment companies
•
> 30 Saudi investment companies are fully independent & local
•
Top foreign names in Saudi Arabia: JP Morgan, Merrill Lynch, BNP Paribas, Credit
Suisse, HSBC, Deutsche Bank, KKR, Lazard
•
Top domestic names: The Investor, Falcom, Jadwa, Alkhabeer
•
Core businesses: Investment banking, brokerage, asset management
•
256 mutual funds, > $27 billion AUM
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Inward investments into Saudi Arabia
•
Market preparing for King Abdullah’s
signature, replace existing swap arrangement
•
Draft legislation prepared, awaiting only final
royal approval
•
CMA chairman wants short delay, time for
upgrading market systems
•
At one point SAMBA’s Saif Saudi fund was
largest country fund in the world
•
Portfolio rebalancing, eventual inclusion in
MSCI, creates demand
•
Some analysts predict up to $10 billion
foreign investor demand for Tadawul listings
(up to 20% of market cap)
Key drivers: Industry & Real Estate
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Next step, global investment in Saudi real estate
•
Currently restricted, no foreign investment in
Saudi real estate sector
•
Expected yields of 25% IRR or more in almost
any sector, any region of Saudi real estate
•
Exceptions: GCC nationals, some expatriate
and international investors allowed
•
Large middle class, purchasing power in SAR
500,000 to SAR 1 million range
•
Perhaps one of the best potential investments
in Saudi Arabia
•
Housing demand today: Over 300,000 new
units required
•
Total Saudi construction spending 2012-2013
was > $225 billion
“With its young and expanding population, Saudi Arabia should remain the most buoyant [real estate] market, in line
with its overall economic development plan….the recent approval of the mortgage law should help to drive growth in
residential construction in response to the current housing shortage”
President MENA, BofA Merrill Lynch
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Saudi Arabia, a source for global capital
King Abdullah Financial City
•
Global demand for Islamic investments, > $3 trillion
•
Existing $3.5 trillion AUM owned by Muslims,
almost none sharia compliant
•
Estimated $200 billion under management in
Switzerland owned by Saudis
•
Most Muslims live a sharia life, want shariacompliant investing
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Saudi Mega Transport & Infrastructure
• 230 billion Dollars
worth of infrastructure
projects are expected to
be completed by 2014.
The Investor for Securities Co.
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King Abdullah Economic City
• With a total development
area of 173 km².
• The total cost of the city is
86 billion Dollars.
• The city is located along the
coast of the red sea, around
100 km north of Jeddah.
The Investor for Securities Co.
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Holy Mosques expansion project
• The total cost of the
expansion is 128 billion
Dollars.
• It doubles the current
capacity from 48
thousand persons to
reach 105 thousand
persons.
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Saudi Aramco projects:
• Aramco owns nearly 80
billion Dollards worth of
projects under
construction or planned
in the field of oil and
gas.
• in addition to
infrastructure projects
associated with it, such
as power plants in the
same oil installations.
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Princess Nora University for Girls:
• The engineering and
construction cost
exceeds 22 billion riyals.
• The total area
estimated at 8 million
square meters.
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King Abdullah International Gardens:
• This is the largest
covered park in the
world.
• Saudi Arabia is planning
to create gardens in the
city of Riyadh at a cost
of more than one billion
Saudi riyals.
The Investor for Securities Co.
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Riyadh Metro Stations:
• Metro of Riyadh will
create six metro lines
main penetrate the
Saudi capital Riyadh
from all directions.
• Includes 85 stations, at
a cost of 22.5 billion
dollars, is scheduled to
run in 2018.
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King Abdullah Financial District:
• The area of ​the center
1.6 million square
meters, It is located
north of the city of
Riyadh.
• The project is estimated
to cost 29 billion Saudi
Riyals ($7.8 billion).
The Investor for Securities Co.
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Ras Al-Khair projects
• Ras al-Khair, also known
as Mineral Industrial
City, lies 90 kilometres
north of Jubail and is
being developed by the
Royal Commission for
Jubail.
• The cost of Ras Al-khair
projects is 4 billions
dollars.
The Investor for Securities Co.
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Sadara Chemical Corp
• The biggest chemicals
complex ever to be built
in a single phase.
• The $19.3bn complex
will produce up to three
million tonnes once it
completes.
The Investor for Securities Co.
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The Investor for Securities Co.
•
Key player in Saudi capital markets
•
Founded 2007, SAR 200 million paid-in capital
•
Profits 2013, > SAR 82 million
•
> 60 professional staff
•
> SAR 11 billion AUM (CHF 2.9 billion)
•
Strong presence in Saudi equity markets, private placements and real estate
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Conclusion
•
Capital flows from and to Saudi Arabia will continue to be important

•
Increasingly sophisticated investors & businesses
Saudi Arabia is a major destination for investors in emerging markets


Foreign direct investment, particularly in future Saudi real estate funds
Portfolio investment in the Saudi stock and sukuk markets, Tadawul
•
Foreign bankers are welcome, but only with CMA regulatory approvals
•
Our Investment Services will capture an important part of global Saudi portfolio
investments
•
The Investor for Securities Co. is ideally placed for both inward and outward Saudi
investments
The Investor for Securities Co.
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Thank you.
Abdullah M. Alfouzan
Chairman
The Investor for Securities Co.
Aljumaiah Center, King Fahd Road
P.O. Box 67838
Riyadh 11517
Saudi Arabia
Telephone: +966-11-200-7002 x 333
E-mail:
[email protected]
Website:
www.theinvestor.com.sa
The Investor for Securities Co.
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