Diversified economy embraces FDI
Lucrative business and investment openings are available across the kingdom
Saudi Arabia’s exciting journey to economic diversification offers a broad range of investment opportunities for adventurous and ambitious international enterprises, but such investors often require highly detailed knowledge of market conditions and potential pitfalls specific to individual commercial and trade sectors before committing significant sums of investment.
As the world’s largest Sharia-compliant asset manager and the kingdom’s second-largest broker, NCB Capital has a wealth of industry experience and is a fully fledged investment bank that offers different kinds of asset management, brokerage and advisory services for clients. “One of the main game changers for investors are the amendments we have seen in Saudi regulations recently that have opened up options for those who want to pursue a particular business,” explains Sarah Jammaz Al Suhaimi, CEO, NCB Capital.
“There are many opportunities here and we are doing a lot in healthcare, logistics, education and infrastructure. For healthcare, that does not mean just hospitals, but also health-related businesses, such as manufacturing supplies or specialized services. One big sector with potential is tourism and tourism services. With the pandemic, many people are traveling within the kingdom, and the country is pushing for further investment in tourism and infrastructural services, particularly in areas like hotels, logistics, restaurants and recreation facilities. Tourism is a large sector and represents an attractive investment opportunity. Entertainment is at the top of the list too, as it is easy to enter and creates jobs. Saudi Arabia needs to think a bit outside the box to keep up in the current global environment.”
Blazing a trail for other companies to follow is Savola Group, with its focus on retail and food operations transforming the enterprise from a humble edible oil factory into one of the largest conglomerates in the Middle East and North Africa in just four decades. The group’s products can now be found in more than 50 countries and its retail arm, Panda, is regarded as the kingdom’s largest grocery chain. The business also holds major shares in other publicly listed companies, like Almarai Dairy Company and Herfy Foods Company.
“Our aim is continue to grow via digital transformation and technological innovation that supports the Vision 2030 development plan agenda and our strategy,” states Savola Group’s Group CEO Anees Ahmed Moumina. “Part of our strategy is exploring investments in early-stage firms that are innovative and potentially disruptive to both food and retail. This helps us to bring capital to the table, plus a platform of operating companies in the region through which we can leverage these new tech investments. The future for us will be more value-added products; and perhaps openings beyond our core geographies if they have ties to the region.”
In the here and now, Savola Group has worked round the clock to ensure it is ‘business as usual’ during the COVID-19 crisis while also introducing safety measures to protect the health of staff and customers at its food and retail outlets, including an expansion of its digital presence. “We have focused on maintaining the supply of our portfolio of food products across all channels, both physically and digitally,” Moumina explains. “Separately, in our retail segment, we have worked tirelessly with other food suppliers to ensure sufficient inventory of key grocery products to meet the significant demand increase. Beyond the immediate priorities, we are certainly continuing to adapt our strategies to meet changing consumer habits.
“We have started focusing on digital channels within the last couple of years and the crisis has accelerated our efforts in this area and doubled our commitment to digital transformation. For example, we have launched
Pandaclick as an e-commerce grocery solution to facilitate easy access to Panda products from our stores to the homes of our customers. This crisis has also cemented our internal strategies and investment priorities for the coming period both from a localization effort and for food security.
“Consumer trends across our market are driven by the young demographics, and are focused on quality of food and convenience. These two might seem to be contradictory, but through innovation and advancement in food product development, we can provide food solutions to our consumers who are seeking both. In addition to this, barring the recent pandemic-related shutdowns, enjoying food away from the home is growing at a healthy pace. With time, this segment will come back stronger and we need to ensure we have the right business-to-business food products to serve this area. Finally, as I mentioned earlier, technology and innovation investments in food and retail tech will be particular focuses for Savola Group in the future.”
In 2019, Savola Group was included in MSCI’S Emerging Market Index, a development that was welcomed by Moumina and his board. At the beginning of 2019, our foreign ownership was roughly 2 percent,” he says. “In the past 18 months, we have made a concentrated effort to proactively engage with global institutional active and passive funds that are keen on exposure to the kingdom. We have focused on articulating our strategy for the future while being fully transparent about the challenges that faced us in the recent past. We are happy to see that our foreign investment ownership is now close to 10 percent. This is an important endorsement of our strategy to bring more foreign investors into the public markets in support of Vision 2030.”
Another success story is Hisham Bin Abdulaziz Almousa Investment Group (HM Group), a family business that has grown steadily into one of the kingdom’s leading investment enterprises. The group has interests in most of the sectors the Saudi Vision 2030 development plan promotes, including real estate, retail, food and beverage, aviation, financial services, technology and health. Two flagship sectors for the company are real estate and retail, in which it operates through a number of subsidiaries.
HM Group’s General Director Hisham Almousa says: “We have a 60-year track record of success and have built partnerships and developed experience with multiple large international players. We are value-added partners through our expertise in the local market in terms of regulations, demographics and the evolution of demand. We believe in the unparalleled opportunities for growth in the kingdom and are seeking to leverage our experience, expertise and connections to attract more globally respected brands to further bolster our portfolio and pave the way for the next 60 years of success.”
Given its overwhelmingly young population, Saudi Arabia’s healthcare sector may not at first glance be the most obvious choice for international investors looking to tap into the country’s wealth of investment openings, but such firms would do well to follow the example of Tamer Group. The family-owned business has grown over the past century from a single pharmacy into a diversified conglomerate with more than 4,000 employees.
The firm has been Saudi Arabia’s leading importer, marketer and distributor of pharmaceuticals and medical products for the past decade, and is a leading player in beauty, nutrition, wellness and prestige goods, as Chairman and Partner Ayman Tamer explains: “Our core business is healthcare, while the second most significant is consumer and wellness products. I see growth opportunities in all our fields, including a positive upstream opportunity in the healthcare field as the government looks to privatize provision and services.”
“We started focusing on digital channels within the last couple of years and the COVID-19 crisis has accelerated our efforts and doubled our commitment to digital transformation.”
Anees Ahmed Moumina, Group CEO, Savola Group