BUSINESS

Navigating the opportunities and challenges of investing in Saudi Arabia

May 11, 2023
Tushar Singhvi, Deputy CEO and Head of Investments at Crescent Enterprises.
Tushar Singhvi, Deputy CEO and Head of Investments at Crescent Enterprises.

Tushar Singhvi, Deputy CEO and Head of Investments at Crescent Enterprises, has a keen eye for spotting investment opportunities that can reap enormous benefits for his organisation. Crescent Enterprises, known for its diverse portfolio, has recently ventured into the Saudi Arabian market. In this interview, Singhvi discusses his insights on the Saudi Arabian market's opportunities, challenges, and untapped potential and how Crescent Enterprises plans to leverage the market to strengthen its foothold in the region.

The Saudi market is proving essential for startups in the region.

"Saudi Arabia is the largest country in the Gulf region with a population of over 35 million, and the largest economy in the Arab World with a GDP of USD 1 trillion in 2022. And with Vision 2030 underpinning sweeping socio-economic reforms, initiatives, and several giga projects, such as the $500 billion future city, NEOM, currently under construction, startups are looking at the Kingdom as fertile grounds for opportunities, innovation, and global talent flocking to the country. In 2022, venture capital investments in Saudi Arabia grew by 72% to a record-high $987 million. The number of investors also increased significantly, up 30% year-over-year. All these factors position Saudi Arabia as a market that demands the attention of startups and is an environment conducive to growth", said Singhvi.

It is no surprise that Crescent Enterprises, a highly diversified investment company, has already achieved significant success in the Kingdom with its portfolio of companies and plans to explore further opportunities in the region. "We are actively looking at the Saudi Arabian market and looking to deploy capital because of the vast opportunities across sectors, whether that's in logistics, technology, or fintech, to name a few. Kitopi, a cloud-based smart kitchen operator; Transcorp, a temperature-controlled last-mile-delivery service provider; and Shiprocket, a supply chain management software provider, are examples of companies within our portfolio currently operating in the Kingdom. We also have companies such as FreshToHome, a food-tech company, that is looking to expand its operations into Saudi Arabia."

While the current economic environment is conducive for startups, how will an increase in oil prices impact the venture capital industry? "With an increase in oil prices leading to a surplus, theoretically, this should translate into more capital and liquidity in the Saudi market, leading to more growth, which would positively impact the venture capital industry as it looks for new opportunities for investment and returns. Having said that, Saudi Arabia has worked on implementing strategies and initiatives to diversify its economy and reduce its reliance on oil as the prime driver of GDP and growth. With ambitious economic diversity and sustainability goals, underpinned by Vision 2030, the KSA market is prime for venture capital interest", Singhvi enthused.

Saudi Arabia has taken great strides in enhancing the business environment, which has led to an increase in foreign investment and nurturing an innovative startup ecosystem, proving extremely attractive to investors like Singhvi. He said: "Several new initiatives for foreign investors together with governance and the Companies Law reform have boosted the country's appeal to investors and further improved the market for operating enterprises."

In January 2023, the Kingdom also introduced the new Companies Law, reflecting Vision 2030's goal to encourage investment, providing investors with more flexibility and better protection of their business interests. Singhvi emphasised that this is particularly interesting to startup companies and venture capitalists keen to seize the opportunities brought about by the introduction and regulations of the new simple joint stock company.


May 11, 2023
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