You’ve been to Riyadh many times before, what are your impressions this time?
Riyadh as a city is struggling to keep up with the immense growth going on in and around it. The ambitions there are very high, but there are actions behind these ambitions with 100 projects greenlighted in the last year and a pipeline of more to come. There is also an influx into the city of service providers, following the introduction of a law that requires groups that wish to service government agencies, to be headquartered in Riyadh. This is helping to shift activity into Saudi.
How are investors looking to take advantage of these changes?
On the whole, the region remains a big target for those seeking capital, but the capital is getting even smarter. LPs are wary about being over targeted, they are setting the bar higher and getting stricter on who they work with – there is certainly less appetite for plain vanilla funds. Groups are agnostic to how they allocate, they are taking a top-down approach, deciding on the themes they want exposure to, then deciding the best way in – through funds, JVs, co-investments or direct deals.
Western GP interest from private capital remains very high, but capital is becoming ever more sophisticated. They are looking for strong track records within specific mandates, where there is a long-term market opportunity and real conviction. They are increasingly looking at entering through GP stakes, corporate acquisitions and co-investments. Private capital is becoming more difficult to target, which is the way it should be.
There is also a lot of smart capital flowing into the region, not only through the ‘dollar-in, dollar-out’ mandate, but with investors carefully selecting local groups, looking for specialists, with Riyadh being at the forefront of attraction
And what about the region’s view of the West’s general economic difficulties right now?
In the short term, the East still recognizes that there is pain to filter through in the West, and there is a bit of a hold on placing capital, understanding the need to focus on workouts instead. Areas that are of interest remain narrow, niche strategies and credit.
And any update on the need for talent that typifies the region?
There still is an enormous need for talent across the region, especially those with the track record to build out business in industries such as emerging Infrastructure. The changes happening and the buzz that creates is palpable and the general sense of positivity is leading to a need for talent in many sectors. For instance, in the Emirates, plans are moving ahead to open casinos in Abu Dhabi and Ras Al Khaimah, so there’s a growing need for talent in the entertainment sector.
The region will be in the spotlight in 2024, as there is so much happening.