The private markets sector in Saudi Arabia has witnessed significant growth over the past few years, establishing itself as a key player in the Middle East’s evolving economic landscape. As the Kingdom continues its ambitious journey toward economic diversification, private equity (PE) and venture capital (VC) have emerged as critical drivers of this transformation, channeling substantial investments into various sectors, including technology, healthcare, and infrastructure.
To sustain and enhance the growth of the private markets sector, Saudi Arabia has recognized the need to expand its pool of skilled professionals, specifically those with a strong understanding of private markets. Education will be key to ensuring the private markets sector has what it needs to create a strong talent pool.
The growth of private markets in Saudi Arabia
Saudi Arabia’s private markets have experienced remarkable growth over the last five years, driven by a combination of favorable economic policies, government initiatives, and a strong investment climate.
According to the 2019-2023 Saudi Arabia Private Equity Report by Magnitt, commissioned by investor SVC, private equity activity in the Kingdom reached $4 billion in 2023. This marks a significant increase, with consecutive growth over three years, including a 370 percent rise in 2021 and a 590 percent rise in 2022.
This rapid expansion has been characterized by a shift in the nature of private equity transactions. Buyout deals accounted for 80 percent of all PE activity in Saudi Arabia between 2020 and 2023, a 20 percent increase compared to previous years. The food and beverage sector saw the most deals, while manufacturing attracted the largest total investment during this period.
These trends highlight the strategic focus on sectors that align with the Kingdom’s Vision 2030 objectives, which aim to reduce reliance on oil revenues and foster a more diversified and sustainable economy.
Compared to other regions, Saudi Arabia’s private markets have demonstrated resilience and growth, even as global deal-making activities faced headwinds. For example, Bain & Co’s 2024 Asia-Pacific Private Equity survey reported a decline in deal-making in the region, with total activity falling to $147 billion in 2023. In contrast, Saudi Arabia continued to attract significant investment, reflecting the confidence of both regional and international investors in the Kingdom’s long-term economic potential.
Enhancing expertise in private markets
While the growth trajectory of Saudi Arabia’s private markets has been impressive, the sector is not without its challenges. The recent decline in deal value and volume highlights the cautious stance that investors have adopted in response to global economic uncertainties. Rising interest rates, inflationary pressures, and geopolitical risks have all contributed to a more conservative investment environment, impacting the flow of capital into private markets.
Despite the sector’s expansion, there also remains a shortage of professionals with deep expertise in private equity, venture capital, and alternative investments. The rapid growth of these markets has outpaced the development of the talent pool, creating demand for advanced financial skills, strategic investment capabilities, and sophisticated deal structuring expertise.
The Saudi government recognizes that bridging this knowledge gap will be crucial for maintaining the momentum of private markets in the Kingdom.
One of the most effective ways to achieve this is through targeted educational programs and professional certifications tailored to the unique opportunities that a dynamic Gulf market presents. Initiatives such as specialized training programs and partnerships between industry leaders and academic institutions will likely play a pivotal role in preparing young professionals and existing practitioners with the skills required to thrive in this evolving sector.
The role of education
CFA Institute recognizes the importance of equipping professionals with the right skills to navigate the complexities of the private markets sector. The Private Equity Certificate and the foundational Private Markets and Alternative Investments Certificate are both designed to provide professionals with the practical knowledge and technical expertise they need to succeed.
These certifications offer a comprehensive learning experience that covers topics including private equity, venture capital, private debt, and alternative investments. In the Private Equity Certificate, for example, participants gain firsthand experience in building robust leveraged buy-out (LBO) models, assessing deals, and leveraging value creation strategies, all of which are directly applicable to their roles in a competitive private equity landscape.
By earning these certifications, professionals in Saudi Arabia and the wider GCC region can enhance their career prospects, support Vision 2030, and contribute more effectively to the growth and development of the private markets sector.
The future of private markets in Saudi Arabia
The long-term prospects for private markets in Saudi Arabia remain promising, supported by a favorable investment environment, strong government support, and a growing pool of skilled professionals. As the Kingdom continues to pursue its Vision 2030 objectives, the private markets sector is expected to play an increasingly significant role in driving economic diversification and sustainable growth.
To capitalize on these opportunities, the region will need to continue investing in the ongoing development of its talent pool. With investment in education and training and a continued focus on strategic sectors, the Kingdom is well-positioned to maintain its status as a leading hub for private market investments in the Middle East.
Dana Day is the managing director of Global Partnerships & Business Development at CFA Institute.
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