King Abdullah Economic City

Focus Session on Country Investment
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
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
The Investor for Securities Co.
27 million
% population 0-24 years
GDP per capita
Daily value of crude exports
> $650 million
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.
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
The Investor for Securities Co.
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
The Investor for Securities Co.
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
The Investor for Securities Co.
Saudi Mega Transport & Infrastructure
• 230 billion Dollars
worth of infrastructure
projects are expected to
be completed by 2014.
The Investor for Securities Co.
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.
Holy Mosques expansion project
• The total cost of the
expansion is 128 billion
• It doubles the current
capacity from 48
thousand persons to
reach 105 thousand
The Investor for Securities Co.
Saudi Aramco projects:
• Aramco owns nearly 80
billion Dollards worth of
projects under
construction or planned
in the field of oil and
• in addition to
infrastructure projects
associated with it, such
as power plants in the
same oil installations.
The Investor for Securities Co.
Princess Nora University for Girls:
• The engineering and
construction cost
exceeds 22 billion riyals.
• The total area
estimated at 8 million
square meters.
The Investor for Securities Co.
King Abdullah International Gardens:
• This is the largest
covered park in the
• 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.
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.
The Investor for Securities Co.
King Abdullah Financial District:
• The area of ​the center
1.6 million square
meters, It is located
north of the city of
• The project is estimated
to cost 29 billion Saudi
Riyals ($7.8 billion).
The Investor for Securities Co.
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
• The cost of Ras Al-khair
projects is 4 billions
The Investor for Securities Co.
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
The Investor for Securities Co.
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
The Investor for Securities Co.
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
The Investor for Securities Co. is ideally placed for both inward and outward Saudi
The Investor for Securities Co.
Thank you.
Abdullah M. Alfouzan
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
[email protected]
The Investor for Securities Co.

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