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Saudi’s new growth engine, asset management industry, gets PIF boost

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Having an upscale asset management business will definitely benefit the overall PIF objective in terms of adhering to best practices, governance, generating return and compliance

Saudi Arabia’s Public Investment Fund (PIF) is all set to boost the asset managers in the Kingdom through two new initiatives, named ‘Managers Gate Platform’ and ‘Portfolio Management Development Program’.

The initiatives, launched on the sidelines of the Future Investment Initiative Forum in Riyadh in October 2023, will result in the launch of a new digital platform for collaboration between PIF and external fund managers. The portal will also enable secure data sharing, improved communications, and the digitisation of operational and investment due diligence processes.

The ‘Portfolio Management Development Program’ is an educational programme, sponsored by SNB Capital, that will be delivered in partnership with Spain-based IE University, with the aim of providing financial market training to aspiring fund managers within the Kingdom.

Abdulmajeed Al-Hagbani, head of securities investment at PIF, told the Arab News, “The announcements demonstrate the wealth fund’s commitment to the Kingdom’s asset management industry and will improve the resilience, depth and quality of Saudi Arabia’s capital markets,” while adding, “The asset management industry plays a vital role in supporting the efficient allocation of capital and management of risk in the economy, helping to promote economic growth and stability.”

PIF’s Deputy Governor, Yazeed Al-Humeid, noted that the asset management industry grew from SR400 billion (USD 100 billion) to SR800 billion, while highlighting the importance of refining the expertise of specialists in this sector.

The portfolio management programmes, which will be launched in the first quarter of 2024, will be made open to all Saudi nationals with a minimum of three years of experience in the field.

“Having an upscale asset management business will definitely benefit the overall PIF objective in terms of adhering to best practises, governance, generating return and compliance,” Yazeed Al-Humeid remarked further, as he reiterated that the PIF wanted to ensure the development of the Kingdom’s asset management sector, in order to propel the nation’s economic diversification campaign under the ‘Vision 2030’.

The venture capital space in Saudi Arabia has grown from less than SR50 million a year in investments in 2017 to close to SR2 billion in 2023, making the Kingdom the largest in VC investment within the Middle East and North Africa (MENA) region.

As per KPMG’s latest Asset Management Review 2023 publication, assets under management (AUM) in Saudi Arabia have reached over 25% of the size of the country’s GDP. The study also noted some of the emerging themes and changes in the regulatory, tax and Zakat landscape, while analysing the financial performance of twelve large asset management firms as a reference for the industry’s results.

Saudi Capital Market Authority’s quarterly ‘Statistical Bulletin’ for 30 June 2023 saw the number of investment funds in the Kingdom surging by 35.7% year-on-year, rising from 839 to 1,130. The number of investment fund subscribers increased too, from 675,465 to 901,896, thereby representing a 33.5% year-on-year surge. The size of Assets under Management (AUM) reached SR823 billion as of 30 June 2023, from SR756 billion as of 30 June 2022.

“The net income of all market participants rose to SR3.3 billion for the six-month period ending on 30 June 2023, compared to SR6.1 billion reported by the industry during the financial year that ended 31 December 2022,” the report noted further.

To sweeten matters more, the Saudi Stock Market (Tadawul) has become the world’s tenth-largest stock exchange in terms of market capitalisation and the largest in the Gulf Cooperation Council (GCC) region.

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