Mergers and acquisitions activity in Saudi Arabia is set to pick up this year as the kingdom’s sovereign wealth fund accelerates investments and private sector firms look to buy-up rivals, according to a top banker at the securities arm of the country’s biggest lender.
“We see 2023 as an M&A year,” said Zaid Ghoul, SNB Capital’s head of investment banking. “We think there’s a lot of M&A in the pipeline and expect a lot of that to be driven by the PIF, and also consolidation in the insurance and cement industries.”
SNB Capital has been building up its dealmaking capabilities and named Philippe Chabrier de Lassauniere as head of M&A last year in anticipation of a pick-up in work on deals, said Ghoul.
“This is why we launched M&A advisory as a separate unit last year and have hired a team of bankers to develop that pipeline and execute transactions,” said Ghoul.
Investment banking work in the country has been dominated by share sales over the past year, with IPOs in the country raising more than $8 billion in 2022, making it the busiest year for new offerings since 2019, when Saudi Aramco was listed.
The pace of new offerings could slow this year, even as Mohammed ElKuwaiz, chairman of Saudi Arabia’s capital markets regulator, said Sunday about 100 companies are working on IPO plans. The benchmark Tadawul All Share Index has fallen about 14% in the past year, and rising rates are encouraging investors to shift to other asset classes.
“It will be another busy year for IPOs but the timing of bringing deals to market might be impacted as liquidity levels are lower than those witnessed in 2022,” said Ghoul.
--With assistance from Swetha Gopinath.
©2023 Bloomberg L.P.
