As we discussed in our previous blog posts (“The transformation of Saudi Arabia” and “IPOs, PIF and PPPs: It All Spells Opportunities for Financial Institutions”), the Saudi government is responding to its over-reliance on hydrocarbons and what has been a difficult macroeconomic environment by introducing some truly radical changes.
As a new report from Insight Discovery and SS&C Advent highlights, the government’s Vision 2030 strategy focuses on privatization and public-private partnerships (PPPs), improving the business environment, supporting small and medium enterprises, encouraging foreign direct investment and developing its local capital markets.
Key developments include:
- The sale of a 5% stake in state-owned energy giant Saudi Aramco.
- Transfer of the government’s remaining shares in Aramco to the Public Investment Fund (PIF), making it the largest sovereign wealth fund in the world
- Easing of the rules on Qualified Foreign Financial Institutions (QFIs).
- Promoting PPPs to help fund the country’s massive infrastructure projects, giving rise to new debt and equity securities, and opportunities for foreign investors.
- Enhancing the efficiency and liquidity of the Tadawul stock market.
- Building the King Abdullah Financial District (KAFD) into a pioneering financial hub for the region.
A world of opportunity
The resulting market growth and liberalization, along with the investment potential presented by the PPP projects and IPOs, present massive opportunities for both domestic and foreign investors and financial institutions, as well as the service providers that provide them with vital infrastructure and expertise.
As the report goes on to note, the government’s Vision 2030 strategy and National Transformation Program (NTP) signal a transfer of global best practices to the Saudi markets, as well as a general movement towards greater transparency. “These are trends that the world’s leading fund administrators and providers of financial technology and outsourced solutions are well placed to support.”
And all of them—investment managers, asset owners and the fund administrators that service them—will need sophisticated trading, risk management, portfolio management, accounting, reconciliation, performance measurement, compliance and reporting platforms to help them make the most of those emerging opportunities.
For as the report points out, world-class technology has long been a game changer for investment managers and other asset owners as they seek to boost efficiency, lower costs and achieve better outcomes for their clients. “In a similar fashion, world-class technology will play a key role in the transformation of Saudi Arabia,” it adds.
The radical changes set to be introduced in the coming years therefore mean that “Saudi Arabia should represent a bonanza for companies that develop technology to provide cutting-edge solutions to asset owners and other stakeholders.”
The transformation of Saudi Arabia 2016-30: What are the opportunities for financial companies? by Insight Discovery and SS&C Advent