Saudi Arabia’s Private Debt Market Set to Exceed $1.77bn by Q3 2024

Saudi Arabia’s Private Debt Market Sees Record Growth Amid Vision 2030 Initiatives

RIYADH: Saudi Arabia’s private debt market is witnessing remarkable growth.

This growth is due to a sharp rise in investor confidence, with 97 percent of Middle East-based investors now viewing the country as the most trusted market for private debt, up from 82 percent in 2023, according to data from a Preqin survey.

The report, titled “Capturing the Territory: The Rise of Private Debt Funds in Saudi Arabia to 2024,” was published in partnership with Saudi Venture Capital. It shows the growing interest from regional and global investors in Vision 2030 topics.

The findings are consistent with the findings of the Saudi Arabia Private Debt Fund Transformation, which accounted for 27.5 percent of the private debt in the Middle East and North Africa region between the third quarter of 2016 and 2024.

In 2022, private equity funds collectively raised $335 million in investments, a sharp increase from the $32 million raised in 2003.

“This first-of-its-kind report exemplifies the emergence of private equity funds in Saudi Arabia as a key asset class, which is working to shape the kingdom’s Vision 2030 and the economy at large,” said Napil Koshak, chief administration officer and team member at SVC.

Ghosh said, “At SVC, we remain committed to fostering the growth of such reports that inform fundamental outcomes and policies and provide information to policymakers, investors, and institutions in order to promote a stronger private equity ecosystem.”

The Prequin analysis’s lead author, David Dakins, said, “Investors are not alone in watching the growth and evolution of Saudi Arabia’s new private credit sector.”

“Saudi Arabia’s success in the Middle East and beyond reinforces the drive to improve the efficiency of capital preservation for sustainable growth in a global economy,” Dakins continued.

Of all private credit funds with investments tied to Saudi Arabia, which were held between the third quarter of 2016 and 2024, 50 percent of the total was comprised of private credit, with direct credit and textile lending approaching 30 percent. The average is 20 percent.

The country’s support for startups and small and medium-sized enterprises reflects the growing presence of textile lending, which represents 75 percent of all funds in Saudi Arabia’s emerging market.

According to a research, 58 percent of investors in the Middle East said that private debt is the most attractive asset class for them to raise their investments in the upcoming year.This is 50% more than in 2023.

Currently, 12% of investors in the region believe that private credit is a very reliable asset class, up from 31% in 2023.

As Saudi Arabia’s Vision 2030 goals approach, private credit is expected to grow in line with the expanding industrial sector. New regulatory frameworks were introduced in 2018, and the overall investor outlook for the Kingdom is more positive in terms of the growth rate and earnings of the private credit sector.