Assets under management in Saudi surges to over SAR800 billion

31 October 2023 3 min. read
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Assets under management held by Saudi Arabia’s largest asset managers surged by 36% in the past twelve months, lifting the size of the sector to over SAR800 billion. This is according to research by KPMG.

The asset management industry is a key catalyst for investments in public and private initiatives, private sector funding, and wealth-focused financial investments. The industry serves government organisations, pension funds, institutional investors, high-net worth individuals and family offices, and retail investors.

To shed light on the state of the sector, researchers at KPMG assessed the year-on-year performance of the twelve large asset management firms in the Kingdom. Together these funds now have SAR823 billion under their command – which equates to more than a quarter of Saudi Arabia’s entire annual gross domestic product.

Assets under management

In the period spanning June 2022 to June 2023, assets under management grew by 36%, driven largely by a favourable investment environment fostered by the Saudi government.

Across the asset management landscape, the number of investment funds soared by 36% year-on-year, rising from 839 to 1,130 while the number of public and private investment fund subscribers grew from 675,465 to 901,896, representing a 34% year-on-year surge.

One trend driving the growth has been increased interest from foreign investors, with net foreign investment in the main market reaching the record level of SAR184 billion. “We also found that from June 2019 to June 2023, foreign investors’ ownership in the Saudi equities and debt markets grew by a compound average growth rate of around 17% – from SAR198 billion to SAR376 billion,” said Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia.

Assets under management + TASI

The further opening up of the Tadawul stock exchange is a notable example. Today, international investors represent 15% of the free-float shares that are publicly traded, up from below 10% several years ago.

Shahab: “Tadawul and the Capital Market Authority have implemented several reforms as part of the wider ‘Financial Sector Development Program’ aiming to increase the stock market capitalisation. These have included measures such as market liberalisation for foreign investors, post-trade reforms, Tadawul’s own transformation into Saudi Tadawul Group, improved corporate governance standards and transparency, streamlining the listing process, and expanding product offerings.”

“The inclusion of Tadawul into global indices, such as MSCI Emerging Markets Index, FTSE Russell, and S&P Dow Jones, has also helped,” added Saleh Mostafa, a partner at KPMG in Saudi Arabia.

Number of funds

Looking ahead, Shahab said that the development of the asset management sector is a key pillar of realising Saudi Arabia’s Vision 2030 agenda. “Especially for the ambitious agenda of giga and mega projects, financing requirements and hence the investment requirements (and opportunities) will continue to rise.”

A previous report from Boston Consulting Group found that while the asset management base in the Middle East is on the rise, profits in the sector are dipping. The analysis suggests asset managers should reassess their operations and refresh their business model in line with a changing future.