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Private equity (PE) activity in the Kingdom hit a record USD 4 bn in 2023, up 11.1% y-o-y, according to a recent report (pdf) by venture data platform Magnitt. The 2023 figure highlights a steady growth trajectory since 2020, with total PE investments growing 3.7x y-o-y in 20231 to USD 610 mn before climbing to USD 3.6 bn in 2022.
Where the growth is coming from: The report shows growth in the local PE landscape led by a large volume of food and beverage transactions coupled with the high value of manufacturing buyouts. The figure is up from USD 3.6 bn in 2022 and USD 610 mn in 2021.
The methodology: The the report covers buyouts, PE growth, leveraged buyouts and bolt-ons. It doesn’t include venture capital, private debt, venture debt, real estate, infrastructure or natural resources investments. The report was sponsored by Saudi Venture Capital (SVC).
Overall, buyouts made up the largest share of PE activity in the past five years: On average, buyouts accounted for 80% of the total capital deployed in private equity in the past five years. It accounted for 70% of total deployed capital in 2023 and 75% in 2022, after peaking at 80% in 2021. Meanwhile, growth transactions hit a high of 27% last year up from 21% in 2022 and 10% in 2021.
The manufacturing sector led sectors with highest PE investment values in the past five years at USD 4 bn, accounting for 46% of total PE value, the report showed. This was followed by financial services with USD 2 bn (29%), telecommunications with USD 1 bn (11%), healthcare with USD 570 mn (7%), and food and beverages with USD 155 mn (2%).
But F&B clinched the top spot for number of PE transactions: Despite the food and beverages sector coming in last in terms of PE investment values during 2019-2023, it led the number of transactions with 12 buyouts and three growth transactions. Healthcare came in second with 11 transactions followed by the financial services sector which came in at eight. The technology and manufacturing sectors saw seven and six transactions, respectively.
PIF has been scoring big in private equity transactions: The top five PE transactions, which were mostly led by the Public Investment Fund (PIF), accounted for 76% of total PE between 2019 and 2023. The PIF topped transactions with a USD 3.3 bn buyout of Sabic’s steel subsidiary Hadeed in 2023, followed by the sovereign wealth fund’s USD 1.5 bn buyout of Prince Al Waleed Bin Talal’s Kingdom Holding in 2022. Its acquisition of a 80% stake in telecom operator Zain in 2022 for USD 806.8 mn came in third.
