GDP expands in 2Q on robust non-oil growth, while budget deficit narrows

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Riyadh Air soon to fly? + Arab Investment Company is on “exit mode”

Good morning, everyone, and welcome to the accidental macroeconomics edition of EnterpriseAM Saudi. Our news well is dominated by GDP growth figures from Gastat, the latest quarterly budget performance report from the Finance Ministry, and S&P’s forecasts for the Kingdom’s financial health over the next few years.

The gist? Non-oil activity propped up the economy in 2Q, and growth is expected to remain solid through 2028 as diversification efforts bear fruit, but we should make ourselves comfortable with twin deficits as they’re not going anywhere soon.

Also in today’s issue: An Acwa Power-led consortium secures SAR 12.8 bn for two 3.6 GW IPP projects, and Rawabi Marketing is moving ahead with floating 1 mn shares on Nomu.

BUT FIRST- We spent the weekend low-key freaking out about AI, and our weekend reading did little to assuage our malaise: AI is coming for consulting, and McKinsey is freaking out, the Wall Street Journal warns us. Smart folks are starting to get really worried not just about the safety of our jobs, but about whether we can even trust AI not to kill us. Per Bloomberg “Would a chatbot kill you if it got the chance? It seems that the answer — under the right circumstances — is probably.” And over in the pages of the FT, novelists are losing it, worrying about the future of creativity in a gen AI world.

Palate cleanser: Samuel L. Jackson in a delightfully profane ad for wind energy player Vattenfall.

HAPPENING TODAY-

Eight Opec+ countries are scheduled to meet today to decide on oil production levels for September. The oil cartel has reportedly agreed in principle to add another 548k bbl / d next month, an unnamed delegate told Bloomberg yesterday.

The last hike? The increase would complete the reversal of a previous 2.2 mn bbl / d cut, bringing the group’s production to some 33 mn bbl / d by September. Goldman Sachs expects Opec+ to stop increasing output after September, citing rising US oil production and slowing global demand. A separate, larger cut of 3.65 mn bbl / d remains in effect until the end of 2026.

We took a deep dive on Opec+’s output increase and what it means for us.

WEATHER- It’s another blazing day in the Kingdom, with Riyadh expected to see a high of 44°C and a low of 34°C today, while Jeddah’s mercury will go as high as 40°C and as low as 33°C. Makkah is in for thunderstorms, with a 42°C high and 35°C low.

NEWS TRIGGERS-

Aramco is expected to publish its 1H 2025 earnings on Tuesday, 5 August, according to the company’s website. The oil giant is forecasted to post SAR 92.8 bn in net income for the quarter, up from SAR 106.2 bn recorded in the same period last year, according to Argaam.

REFRESHER- The company posted a 4.6% y-o-y drop in net income to SAR 97.5 bn (USD 26 bn) in 1Q 2025, exceeding analyst estimates by some SAR 3.4 bn amid weaker oil prices caused by global economic uncertainty.

Tuesday will be busy: Riyad Bank’s Purchasing Managers Index for July is also set to come out on the same day. Non-oil business activity in the Kingdom accelerated in June, driven by expansions in new client demand and a surge in hiring.

PSAs-

#1- Businesses subject to withholding tax must file their June tax returns by Sunday, 10 August via Zatca’s website, according to a post on X. Meanwhile, Businesses subject to VAT have until Sunday, 31 August 2025 to file their July tax returns.

#2- Registration is now open for Monsha’at’s Jadeer Tour in Khobar, the authority said on X on Thursday. The two-day event begins on Monday, 11 August, in the city’s SME Support Center, offering attendees the opportunity to learn about the Jadeer service and receive valuable training and support for their businesses.

WATCH THIS SPACE-

#1- The USD 1.2 bn state-backed Arab Investment Company (TAIC) is divesting its legacy portfolio as it pivots toward private markets, CEO Abdullah Bakhraibah told Bloomberg. The move aims to lift average annual returns to 9% from 5%, following a strategic review that weighed closing the firm against a full overhaul.

Going “exit mode”: TAIC is liquidating its holdings in short-term lending, letters of credit, government bonds, and treasury bills as it shifts to a “commercially-driven investor,” Bakhraibah — who joined the company in 2023 from State Street Corp — said. The freed-up capital will be redeployed mainly into private markets, public equities and venture investments, targeting sectors like healthcare, education, and technology, industrials, and artificial intelligence. The firm plans at least 20 new transactions this year across shareholder countries and is exploring potential partnerships with the PIF and Kuwait’s sovereign wealth fund.

About TAIC: Founded in 1974, the firm is one of the region’s first sovereign wealth funds, owned by 17 Middle Eastern countries, with Saudi Arabia and Kuwait among its largest shareholders.

#2- Riyadh Air soon to fly in London’s sky? PIF-owned Riyadh Air will reportedly launch flights on 26 October connecting Riyadh and London Heathrow Airport, using its Boeing 787-9 Dreamliner fleet, Aviation Business reported. The move follows securing a daily slot at Heathrow swapping with British Airways, marking its first-ever international destination in Europe.

Could we see the launch before 3Q ends? Saudi’s newest carrier has pushed back its launch to 3Q 2025 from earlier this year after facing delays in Boeing aircraft deliveries. The airline voiced plans in June to serve 100 cities by 2030, aiming to add a destination every two months once it’s operational. The carrier also announced it has snapped up the necessary landing slots for its first destinations, and is set to reveal its first route and ticket sale mechanism in the upcoming months.

#3- 23 people were injured when an amusement park ride collapsed in the Al Hada area of Taif on Wednesday, Al Arabiya reported. The 360 Big Pendulum ride broke mid-air, causing the section carrying passengers to crash to the ground, which pushed authorities to shut down the park and launch an investigation into the accident.

OIL WATCH-

Saudi Arabia’s oil drilling rig count has fallen for the sixth consecutive month to 20, its lowest level in over two decades, and a significant drop from 46 rigs in early 2024 as the nation pivots its investment focus from oil to natural gas, Bloomberg reports, citing Baker Hughes data.

Out with the old: The 18-month downward trend has largely been driven by Riyadh’s decision to abandon plans to increase Saudi Aramco’s oil production capacity to 13 mn bbl/d, maintaining it at the current 12 mn. With several major oilfield expansion projects now complete or nearing completion, the need for new oil rigs has diminished, Qamar Energy founder Robin Mills said.

In with the new: Over half of the Aramco’s upstream spending is now directed towards gas projects, the star of which is the USD 100 bn Jafurah gas project, whose first phase is expected to start this year, Aramco CEO Amin Nasser said in May. The Kingdom aims to replace approximately 1 mn barrels of crude oil used for domestic power generation with natural gas by 2030 and is also exploring options for future gas exports.

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🌍 THE BIG STORY ABROAD-

It’s finally August — aka Tariff Month — and US President Donald Trump has published alist of new tariffs set to be implemented next Friday. Trading partners are sorted into three groups depending on trade surplus, with most of the Gulf falling to the first group hit by the minimum 10%.

Among the highest tariffs: Canada will be slapped with a 35% tariff, higher than the earlier announced 25%, as diplomatic friction between the country continues and after it said it would recognize a Palestinian state; Switzerland was slapped with a 39% tariff; and India will be subject to a 25%.

The story is everywhere in the foreign press: Bloomberg | Reuters | Financial Times | CNBC | New York Times

ALSO- Trump shoots the messenger: Worse-than-expected job growth numbers prompted the president to fire the Bureau of Labor Statistics commissioner Erika McEntarfer, a Biden appointee who “faked the Jobs Numbers before the Election to try and boost Kamala’s [Harris’] chances of Victory,“ he claimed.

The Fed is also closer to danger: The decision coincided with an opening for Trump to target the Fed by appointing one more governor, after governor Adriana Kugler resigned on Friday. Trump had lashed out at chairman Jerome Powell for not capitulating to interest rate cuts demands, calling him “TOO ANGRY, TOO STUPID, & TOO POLITICAL,” and calling on the Fed’s board to assume control of the independent institution.

Markets are not liking the volatility: Dow Jones closed down 1.2% on Friday, while the S&P declined 1.6% and the Nasdaq Composite shed 2.2%.

ALSO GETTING ATTENTION- Apple and Amazon published their earnings on Thursday:

Apple benefited from a boost in iPhone sales as customers rushed to lock in pre-tariff prices, with overall sales rising 10% y-o-y. CEO Tim Cook said the company will be hit with USD 1.1 bn in costs from the tariffs in 3Q 2025 alone. (Wall Street Journal | Reuters)
Amazon’s shares fell more than 7% after hours as its cloud computing unit failed to meet earnings expectations, with net income margins contracting, after rivals Microsoft and Alphabet both reported impressive performance for their cloud units. (Reuters)

CIRCLE YOUR CALENDAR-

Riyadh is set to host the first-ever CoMotion Global 2025 in the Middle East between 7-9 December. The three-day event will bring together global leaders in sectors like sustainability, urban technologies, and smart mobility to showcase the Kingdom’s mega projects and investments in smart infrastructure via panel discussions, presentations, and networking windows, state news agency SPA reported on Thursday.

GDP grows 3.9% with non-oil sector at the helm

Saudi Arabia’s real GDP grew 3.9% y-o-y in the 2Q 2025, supported by a strong momentum in the non-oil sector, according to flash estimates (pdf) from the General Authority for Statistics (Gastat) Non-oil activities saw the strongest growth, surging 4.7% y-o-y, while oil activities increased 3.8% y-o-y and government activities recorded a modest 0.6% increase.

The breakdown: Non-oil activities made the largest contribution to GDP growth, accounting for 2.7 percentage points. Oil activities also made a positive contribution of 0.9 percentage points, while government activities added 0.1 percentage points and net taxes on products contributed 0.2 percentage points.

On a quarterly basis: the kingdom’s seasonally adjusted real GDP rose 2.1% q-o-q in 1Q 2025, largely fueled by a substantial 5.6% increase in oil activities, their biggest jump since 3Q 2021. Non-oil activities also expanded 1.6%, while government activities contracted by 0.8%.

The big picture: “This coincides with Opec+ beginning to raise output from April and the accelerated pace that the Kingdom pushed for from June,” Capital Economics’ James Swanston wrote in a recent research note seen by EnterpriseAM. The move to increase oil output by over 500k bpd through August and September will further boost oil GDP growth in 3Q 2025, CE projected.

The growth will continue over the second half of the year, with Saudi Arabia’s economic expansion set to accelerate on the back of increased oil output, Swanston said in the research note. Non-oil business activity in the Kingdom hit a three-month high in June, driven by expansions in new client demand and a surge in hiring.

BUT- Lower revenues from oil exports are likely to push the government towards fiscal consolidation, which has the potential to affect non-oil growth. “Faster growth in the oil sector will cause overall GDP to accelerate by more than other analysts expect this year, but this will mask a slowdown in the non-oil sector,” Swanston wrote.

ICYMI- The Kingdom’s oil exports dropped 21.8% y-o-y to SAR 59.3 bn in May, its lowest level since May 2021, stretching April’s downward trend.

GDP outlook in focus: The IMF recently raised its forecast for our GDP growth in 2025 to 3.6%, up 0.6 percentage points from its April projection. Growth for 2026 is also expected to rise to 3.9%, revised upwards by 0.2 percentage points. The World Bank maintained in June its growth forecasts for Saudi Arabia at 2.8% in 2025 and 4.5% in 2026, while a recent Reuters poll anticipates Saudi Arabia to record 3.8% growth this year.

REMEMBER- Gastat recently updated its nominal and real GDP historical data over 2011-2024 as part of a revision project that looks to better capture economic transformation with more detailed insights into the performance of key sectors in the economy. GDP growth during 1Q 2025 was revised upwards to 3.4% y-o-y, from the 2.7% figure reported back in May.

Budget deficit narrows to SAR 34.5 bn in 2Q 2025

The budget deficit narrowed to SAR 34.5 bn in 2Q 2025 from SAR 58.7 bn in the previous quarter, according to the Finance Ministry’s quarterly budget performance report (pdf). Government revenues reached SAR 301.6 bn during the quarter, down 15% y-o-y, while expenditures fell 9% y-o-y to SAR 336.1 bn.

For the first half of the year, the deficit totaled SAR 93.2 bn, with revenues reaching SAR 565.2 bn, down 13% compared to the same period last year, while expenditures came in at SAR 658.4 bn, down 2% y-o-y.

ICYMI- Fitch forecasts that the budget deficit will widen to 4.0% of GDP in 2025 and 4.1% in 2026, primarily due to lower projected oil prices — as the average Brent crude price is expected to hit USD 70 a barrel this year — and reduced dividends from Saudi Aramco.

The Finance Ministry expected the budget deficit to come in at 2.3% of GDP (SAR 101 bn) in this fiscal year. Officials said the Kingdom is willing to accept (modest) fiscal deficits as the price of pursuing long-term diversification goals, framing it as wanting to avoid “overheating” the national economy.

THE BREAKDOWN-

Oil revenues accounted for around 50% of total government income in 2Q 2025, coming in at SAR 151.7 bn (a drop of c. 29% y-o-y). Meanwhile, non-oil revenues made up the other half, reaching SAR 149.9 bn, up about 7% compared to the same period last year, driven by higher tax collections across the board.

Total expenditures in 2Q 2025 stood at SAR 336.1 bn, down 9% y-o-y. Compensation for government employees remained the single largest spending item at SAR 140.4 bn — roughly 42% of total spending — and was broadly flat compared to the same quarter last year. Spending on goods and services followed at SAR 73.6 bn, down 3% y-o-y.

On a 1H basis: Oil revenues came in at SAR 301.5 bn, down 24% y-o-y, while non-oil revenues rose 5% y-o-y to SAR 263.7 bn. Compensation of employees increased 3% to SAR 286.5 bn, and spending on goods and services reached SAR 138.2 bn, inching up 1% y-o-y.

The debt situation: Total public debt stood at SAR 1.39 tn at the end of the second quarter, with domestic debt amounting to SAR 871.3 bn, while external debt reached SAR 515.1 bn. Debt issuances during the first half of the year included SAR 197.6 bn of domestic debt and SAR 54 bn in external debt.

GDP growth to average 3.5% until 2028 -S&P

Saudi Arabia’s economic diversification is set to drive an average annual GDP growth of 3.5% through 2028, even as Vision 2030 investments contribute to fiscal deficits and the global oil market faces uncertainty, S&P Global Ratings said in its Saudi Credit Trends report (pdf). This is supported by expected stability across the banking and corporate sectors and strong growth prospects for an investment-grade ins. market.

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Twin deficits are sticking around from 2025-2028,, with fiscal deficits averaging 4.4% of GDP and current account deficits around 2.4% of GDP due to government spending on Vision 2030 projects, major international events, and rising imports for development projects. Gross external financing needs are expected to rise to an average of 85% of current account receipts and usable reserves, up from 69% last year.

Zooming out: S&P expects the non-oil sector’s contribution to the Kingdom’s GDP to remain stable around the 51-52% mark until 2028. Oil is expected to contribute 27-28%, while the government sector’s share will remain a steady 21% of the economy.

Saudi banks are well-capitalized, with a capital adequacy ratio of 19.6% at the end of 2024, far exceeding the 10.5% minimum requirement. This is reflected in the “Strong” rating for capital and earnings across all eight rated financial institutions, all of which have a “Stable” outlook with ratings from A to BBB+.

.. and are adopting new funding strategies: Banks are progressively using alternative funding sources like external debt to support Vision 2030 investment needs, creating a net external debt position of nearly 1% of total loans by the end of 2024.

The Saudi corporate and infrastructure portfolio is largely stable, with 71% of its issuers being investment-grade, with a similar ratio of government-related entities (GREs). All rated companies have a rating between A+ and B+ with a stable outlook, except for Almarai which has a positive outlook.

The ins. market is highly concentrated, with the top five players generating 70%-75% of revenues. This, along with intense competition in key lines like motor and medical, pressures the margins and underwriting performance of the other 21 insurers. Despite these market-wide challenges, the six rated issuers are all investment-grade with stable outlooks.

REMEMBER- The rating agency had raised its 2025 GDP growth forecast for the Kingdom by 0.2 percentage points to 3.7% in June, citing increased oil production. However, the agency lowered its projections for subsequent years due to a revised GDP methodology, trimming its 2026 forecast by 0.3 percentage points to 3.9% and setting its forecast for 2027 to 3.2%, and for 2028 to 3.1%.

Acwa Power-led consortium secures SAR 12.8 bn for 3.6 GW IPP projects

Funding secured for two power plants: An Acwa Power -led consortium, along with Saudi Electricity Company (SEC) and Korea Electric Power Corporation (Kepco), secured SAR 12.8 bn in senior debt financing for the establishment of Rumah-1 in Riyadh and Al Nairyah-1 in the Eastern Province, Trade Arabia reported on Thursday.

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Who’s in? The financing came from Export Import Bank of Korea (Kexim), Saudi National Bank, Saudi Investment Bank, Banque Saudi Fransi, Standard Chartered Bank, Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, and Arab Petroleum Investments Corporation.

About the projects: The two large-scale combined cycle gas turbine power plants — costing a combined SAR 15 bn — will each boast a production capacity of 1.8 MW, making up for nearly 2.5% of the national grid’s capacity.

Who owns what? Saudi Power Procurement Company (SPPC) is the principal buyer for both projects, with Acwa Power and SEC each holding a 35% stake, while Kepco will obtain the remaining 30%. With a combined financing of SAR 6.4 bn each, Remal Energy Company will operate Rumah-1 plant, while Naseem Energy Company will take over Nairyah-1.

Chemicals supplier Rawabi Marketing is floating 1 mn shares on Nomu in a primary offering

Rawabi Marketing Int’l issues prospectus for Nomu IPO: Riyadh-based chemicals company Rawabi Marketing International (RMI) is offering 1 mn new shares — representing 6.45% of its post-IPO capital — on Tadawul’s parallel market Nomu to fund growth plans, according to a prospectus (pdf). The primary offering comes a little over four months after the company secured regulatory approval for the move.

The timeline: The subscription period is due to kick off on Wednesday, 27 August and wrap up on Wednesday, 3 September. Qualified investors will be able to book up to 775k shares each with the minimum limit set at 10. Final allocations will be made on Sunday, 7 September.

RMI’s substantial shareholders will not receive any proceeds. They will see their holding diluted to a combined 58.6% stake down from 62.6%, with a 12-months lockup period from the first day of trading.

About the company: Founded in Riyadh in 1994, Rawabi is a supplier of commodity and specialty chemicals, and has clients across 25 countries, according to its website. The company’s bottomline shed 41% y-o-y to SAR 11 mn in 9M 2024, despite its topline growing 7.8% y-o-y to SAR 438.5 mn over the same period.

ADVISORS- Watheeq Capital quarterbacked the transaction as its financial advisor, with Derayah financial acting as the lead manager. Receiving agents include Alinma Investment, Al Rajhi Capital, SNB Capital

ALSO IN THE NOMU PIPELINE- The National Signboards Company for Industry (SignWorld) was the latest to issue a prospectus for its Nomu IPO. The Capital Market Authority has most recently cleared Nayomi brand operator Jamjoom Fashion Trading, online supplement store Alwazn Almithaly for Trading, along with two new equity funds to list on the parallel market. Qudra for Communications and IT, medical equipment supplier Wajd, property developer Hammad Mohammed Bin Saedan Real Estate, and Afaq Al Arabiya for Transportation and Storage, had also lined up the regulator’s approval earlier to IPO on Nomu.

Acwa Power, Elm, Saptco, Yamama Cement report 2Q earnings

ACWA POWER-

Acwa Power’s net income dropped by 23.6% y-o-y to SAR 481.8 mn in 2Q 2025, due to higher impairment expense and 2Q 2024 divestment gains, which were partially offset by higher operating income, lower G&A expenses, and a higher equity share, it said in an earnings release (pdf) on Thursday. The figure fell short of Bloomberg’s analysts expectations of SAR 564.3 mn.

Meanwhile, revenue went up 11.8% y-o-y to SAR 1.7 bn in 2Q 2025, driven by higher electricity sales.

On a 1H basis, the company’s bottom line inched down 1.9% y-o-y to SAR 909 mn, while its top line increased 32% y-o-y to SAR 3.7 bn.

Dividends: The power giant distributed SAR 62.5 mn in dividends for 1H 2025, compared to SAR 376.6 mn for the same period last year.

ELM COMPANY-

Elm Company’s net income rose 21.1% y-o-y to SAR 590 mn in 2Q 2025, supported by strong top-line growth and higher gross profitability, according to a disclosure to Tadawul. Revenue climbed 27.1% y-o-y to SAR 2.2 bn during the quarter, driven by solid performances across its digital businesses, process outsourcing, and professional services segments.

On a 1H basis, the company’s bottom line rose 30.6% y-o-y to SAR 1.1 bn, while revenue increased 21% y-o-y to SAR 4.1 bn.

ALSO- Elm Education’s board greenlit the distribution of SAR 350.4 mn in dividends for 1H 2025 at SAR 4.50 apiece, it said in a separate Tadawul disclosure. The distribution date is set for 19 August.

SAPTCO-

Saudi PublicTransport Company’s (Saptco) net loss slightly narrowed to SAR 40.5 mn in 2Q 2025, compared to SAR 41.6 mn in the same period last year, despite higher revenue cost, Zakat and Tax expenses, and lower finance and other income, it said in a Tadawul disclosure on Thursday.

Revenue expanded 20.3% y-o-y to SAR 503.1 mn, pushed by a rise in public transport operations. The company’s accumulated losses reached SAR 317.2 mn, or 25.4% of its capital.

On a 1H basis, the company turned to the black with SAR 20.4 mn in net income, compared to SAR 7 mn in net loss in 1H 2024. Revenue increased 16.2% y-o-y to SAR 844.4 mn.

YAMAMA CEMENT-

Yamama Cement Company saw its net income surge 43% y-o-y to SAR 121 mn in 2Q 2025, driven by a significant increase in sales volume, it said in a disclosure to Tadawul on Thursday. Revenue also jumped 48.7% y-o-y to SAR 362.4 mn over the same period.

On a 1H basis, the company’s net income rose 31.8% y-o-y to SAR 263.1 mn, while revenue climbed 37.5% y-o-y to SAR 711.4 mn.

Almarai finalizes SAR 1 bn takeover of Pure Beverages

M&A WATCH-

#1- Almarai fully acquires PBIC for SAR 1 bn: F&B giant Almarai is now the sole owner of water bottling firm Pure Beverages Industry Company (PBIC) for over SAR 1 bn, it said in a Tadawul disclosure on Thursday. The acquisition follows Almarai inking a share purchase agreement with PBIC’s owner Ajlan & Bros Holding Group to obtain its full stake in June.

The rationale: The acquisition plays into Almarai’s plans to grow its beverage portfolio, boost consumer offerings and maximize shareholder value as part of the firm’s growth strategy, the filing read. It also places the dairy giant among the Kingdom’s top four players in the fast-growing water bottling market alongside Nova, Safa Makkah Water and Aquafina.

#2- Ataa sells training academy to Qiyam: Ataa Educational Company, via its subsidiary Arabian Education and Training Group Holding Company, inked an agreement to sell its Al-Faisal International Academy for Training branch to Qiyam Real Estate Company for SAR 40 mn, it said in a disclosure to Tadawul.

Use of proceeds: Funds from the sale will be used to enhance the Ataa Educational’s financial position and operational liquidity as part of its strategy to divest from the training sector and focus on its core education business.

STARTUP WATCH-

Saudi-backed D-GN secures funding: Decentralized data-labeling platform Data Guardians Network (D-GN) raised USD 5 mn in a pre-seed round backed by Hamoud Al Rumayan (LinkedIn), droppGroup and Hub Culture, the company said in a post on LinkedIn.

Use of proceeds: The funding will help D-GN expand its global operations, grow its contributor base, and build out its multimodal data pipelines, Jawlah reports. The company also aims to integrate more closely with AI firms that rely on ethically sourced, high-quality training data.

About D-GN: The platform provides AI companies with training data generated by contributors from around the world. Workers perform tasks like image classification or voice annotation and receive rewards in USDT.

FINANCIAL SERVICES-

HamahCapital is now licensed to give advising consultancy in the securities business, following the completion of business requirements commencements, the Capital Market Authority (CMA) said in a statement on Thursday.

LOGISTICS-

The Saudi Ports Authority (Mawani) added Goodrich’s RSX1shipping service to Jeddah Islamic Port, linking it to three regional ports, it said in a statement. The new service — with a capacity of 720 TEUs — will connect Jeddah with Port Sudan, Djibouti Port in Djibouti, and Jebel Ali Port in the UAE.

MENA PE activity cools down in 1H 2025 — but it’s mostly good news amid signs of a maturing market -Magnitt

Private equity dealmaking in the region took a dip in 1H 2025 as investors recalibrated to focus on bigger transactions with strong fundamentals. Some 29 private equity transactions worth USD 2.9 bn were recorded in the first half of the year, marking a 38% y-o-y decline by count and an 11% drop in value, according to Magnitt’s 1H MENA PE report. This is the third consecutive half-year of cooling PE activity in the region.

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General partners are adopting a more risk-averse stance, pivoting toward fewer, higher conviction transactions on scale-ready platforms with strong fundamentals, according to the report. This explains why the y-o-y drop in PE transaction value is less significant than the decline in volume.

PE transactions in the region skewed larger, with the two biggest size brackets hitting five-year highs in 1H. Transactions in the USD 500 mn to 1 bn range accounted for 29% of total volume, and 42% of total value, while those over USD 1 bn comprised 14% of the count and 36% of the overall value. Smaller buyouts (under USD 50 mn) fell to a record low of 14%, while the USD 100-500 mn bracket nearly doubled y-o-y to 29% of total PE activity by count, and 18% by value. The report does not provide comparative figures for 1H 2024, only the whole of 2024.

The slowdown reflects a strategic recalibration in the region’s PE market rather than a retreat. “The MENA region’s PE recalibration is being led by scale-ready SMEs and high-conviction strategies, not withdrawal. The growing dominance of USD 100 mn+ transactions signals a maturing landscape ready to absorb larger pools of capital,” Magnitt Research Department Manager Farah El Nahlawi said in a statement (pdf) accompanying the report.

Growth capital and buyout transactions were nearly evenly split in 1H, with growth transactions slipping to 52% of total activity as buyouts gained ground despite tighter credit markets, El Nahlawi told EnterpriseAM. The trend points to investors favoring plays where they can take a more hands-on role in operations and actively drive value creation, aiming for exits via trade sales or strategic mergers, she added.

SOUND SMART- Growth transactions involve minority investments in established but expanding companies, providing capital to fuel new markets, products, or acquisitions without taking control. Investors rely primarily on the company’s organic growth for returns, with exits typically via IPOs or secondary sales. Buyouts, by contrast, involve acquiring a majority or full stake, often using leverage to gain operational control, drive restructuring or efficiency improvements, and create value through active ownership. While growth transactions are about accelerating expansion, buyouts are about taking charge to unlock value and position the business for strategic sales or mergers.

The period also saw a rise in syndicated transactions, with four of the top five PE plays involving co-investments between local and international investors. These co-investments are enabling deeper due diligence, better risk-sharing, and stronger operational oversight, El Nahlawi said. She explained that partnerships between global funds and local players are leading to tighter valuation discipline and more sophisticated transaction terms, including performance-linked earnouts and tiered exit provisions, as foreign investors balance protection with access to local market expertise.

This trend is likely to continue, with more structured transactions with performance-based earnouts or tiered exit mechanisms, as “global funds seek protection while leaning on local expertise to navigate the region’s complexity,” El Nahlawi added.

KSA bucks the PE downturn: Combined, Saudi Arabia and the UAE captured 86% of all private equity activity in the region. KSA was home to 13 transactions in the first half of the year, up 8% y-o-y, accounting for the lion’s share (45%) of total activity in the region, supported by local investor appetite. The UAE recorded 12 transactions (41%) over the same period, down 25% y-o-y, with more capital flowing in from international buyers. Egypt (down 89%) and Jordan (down 50%) each saw one transaction in 1H.

Sustainability and fintech emerged as standout sectors in 1H, with sustainability-related transactions accounting for 57% of disclosed funding, fueled by large transactions tied to energy transition initiatives, El Nahlawi told us. These sectors combine scale potential with strong alignment to regional policy priorities, making them prime targets under today’s selective capital deployment, she said. SMEs outside this scale-ready bracket face a widening funding gap, as smaller ventures without clear exit routes or policy backing may struggle to draw investor interest unless supported by accelerators, development funds, or niche positioning, she added.

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Natural gas (Nymex)	USD 3.08	-0.7%
Gold	USD 3,400	+1.5%
BTC	USD 112,887	-0.8% (YTD: +20.6%)
Sukuk/bond market index	912.32	0.0% (YTD: +1.1%)
S&P MENA Bond & Sukuk	147.17	+0.2% (YTD: +5.2%)
VIX (Volatility Index)	20.38	+21.9% (YTD: +17.5%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.1% on Thursday on turnover of SAR 4.4 bn. The index is down 9.3% YTD.

In the green: Sport Clubs (+10.0%), Albabtain (+5.0%) and Bupa Arabia (+4.3%).

In the red: SSP (-4.0%), YC (-3.8%) and HB (-3.2%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% on Thursday on turnover of SAR 26.4 mn. The index is down 14.5% YTD.

In the green: Asas Makeen (+8.8%), NBM (+7.2%) and Fadeco (+5.9%).

In the red: Almohafaza for Education (-11.1%), MOLAN (-9.3%) and Leaf (-8.9%).

CORPORATE ACTIONS-

Eastern Province Cement will distribute SAR 51.6 mn in dividends for 1H 2025 at SAR 0.60 per share, it said in a disclosure to Tadawul. The distribution date is set for 11 September.

Fourth Milling’s board greenlit the distribution of SAR 59.4 mn in interim cash dividends for 1H 2025 at SAR 0.11 per share, starting 4 September, according to a disclosure to Tadawul.

United Electronics Company’s (eXtra) board approved a SAR 160 mn dividend payout at SAR 2 a piece, it said in a disclosure to Tadawul on Thursday. The distribution date is set for 14 August.

CALENDAR

JULY

8 July-24 August (Monday-Sunday): Esports World Cup, Riyadh.

AUGUST

3 August (Sunday): Opec+ meeting to decide on production levels for September.

5 August (Tuesday): Saudi Aramco to publish 2Q 2025 earnings.

7 July-24 August (Monday-Sunday): Esports World Cup, Riyadh.

10 July (Sunday): Deadline for businesses subject to withholding tax to file their June tax returns via Zatca’s website.

5-17 August (Tuesday-Sunday): 2025 Fiba Asia Cup, Jeddah.

11-12 August (Monday-Tuesday): Monsha’at’s Jadeer Tour in Khobar, SME Support Center, Khobar.

31 July (Sunday): Deadline for businesses subject to VAT to file their July tax returns.

3Q 2025

The National Water Company is expected to award a construction contract for the Hail Region Water Networks project.

SEPTEMBER

3-4 September (Wednesday-Thursday): Sustainable Maritime Industry Conference (SMIC), Ritz-Cartlon, Jeddah.

9-11 September (Tuesday-Thursday): International Beauty Expo 2025, Jeddah Superdome.

9-11 September (Tuesday-Thursday): Seredo Real Estate Development and Ownership Exhibition, Jeddah Superdome,

15-17 September (Monday-Wednesday): Money 20/20 Middle East, Riyadh.

17-18 September (Wednesday-Thursday): US Federal Reserve Open Market Committee meeting and Summary of Economic Projections.

23 September (Tuesday): Saudi National Day.

OCTOBER

1 October (Wednesday): Electronic salary transfer via the Musaned platform to include employers with two or more domestic workers.

1-3 October (Wednesday-Friday): Saudi Green Building Forum, Riyadh.

1-3 October (Wednesday-Friday): FIBO Arabia 2025, Riyadh Front Exhibition & Conference Center.

7-8 October (Tuesday-Wednesday): Global EV & Mobility Technology (GEMTECH) Forum, Riyadh.

15 October (Wednesday): Russian-Arab Summit.

17 October (Friday): Saudization for private healthcare roles enters its second phase.

22-23 October (Wednesday-Thursday): Private Capital Forum, Riyadh.

24 October-1 November (Friday-Saturday): AlUla Wellness Festival.

26-27 October (Sunday-Monday): The Global Proptech Summit 2025, Mandarin Oriental Al Faisaliah, Riyadh.

27-30 October (Monday-Thursday): Global Health Exhibition, Riyadh Exhibition and Convention Center, Riyadh.

28-30 October (Tuesday-Thursday): Future Investment Initiative (FII9), King Abdulaziz International Conference Center (KAICC) and the Ritz-Carlton, Riyadh.

28-29 October (Tuesday-Wednesday): US Federal Reserve Open Market Committee meeting.

NOVEMBER

2 November (Sunday): Naming ASICS Innovation Pitch competition’s six finalists.

3-9 November (Monday- Sunday): WTA Tour Finals, Riyadh.

8-9 November (Saturday-Sunday): Del Monte Superleague Supercup, Jeddah.

11-13 November (Tuesday-Thursday): TouriseSummit, Riyadh.

17-20 November (Monday-Thursday): Cityscape Global, Riyadh Exhibition and Convention Centre, Riyadh.

22 November (Saturday): The Ring IV, ANB arena, Riyadh.

23-26 November (Sunday-Wednesday): Saudi Food Exhibition and Conference, Riyadh.

24-26 November (Monday-Wednesday): The World Advanced Manufacturing & Logistics Saudi Expo, Riyadh.

24-26 November (Monday-Wednesday): Metropolis Madinah Conference for civilizational capitals, King Salman International Convention Centre (KSICC), Al Madinah.

27-30 November (Thursday-Sunday): World Rally Championship Saudi Arabia 2025, Jeddah.

28-30 November (Friday-Sunday): UIM F1H2O World Championship, Jeddah.

30 November (Sunday): Zatca 21st E-invoicing integration wave deadline.

DECEMBER

1-4 December (Monday-Thursday): International Conference on Nuclear and Radiological Emergencies, Riyadh.

1-4 December (Monday-Thursday): 61st ISOCARP World Planning Congress, Riyadh.

7-9 December (Sunday-Tuesday): CoMotion Global 2025, Riyadh.

9-10 December (Tuesday-Wednesday): Federal Open Market Committee meeting and Summary of Economic Projections.

25-27 December (Saturday-Monday): The Fortune Global Forum 2025, Riyadh.

31 December (Wednesday): Zatca 22nd E-invoicing integration wave deadline.

31 December (Wednesday): Cancellation of Fines and Exemption of Financial Penalties Initiative by the Zakat, Tax and Customs Authority (Zatca) deadline.

December: Made in Saudi exhibition, Riyadh International Convention and Exhibition Center, Riyadh

2026

JANUARY

1 January (Thursday): Electronic salary transfer via the Musaned platform becomes mandatory for all domestic workers in the Kingdom.

13-15 January (Tuesday-Thursday): Future Minerals Forum, King Abdul Aziz International Conference Center, Riyadh.

20 January (Tuesday): SuperReturn Saudi Arabia, Hotel Fairmont, Riyadh.

18-21 January (Sunday-Wednesday): Saudi Hospital Design and Build Expo, Riyadh.

26-27 (Monday-Tuesday): GPRC Summit, Riyadh.

26-28 (Monday-Wednesday): Saudi Franchise Expo (SFE), Riyadh Exhibition and Convention Centre, Riyadh.

26-28 (Monday-Wednesday): Real Estate Future Forum, Four Seasons Hotel, Riyadh.

27-28 (Tuesday-Wednesday): SkyMove Air Cargo MENA, Riyadh.

28 (Wednesday): Data Center Nation Riyadh, Riyadh.

28-30 (Wednesday-Friday): Jeddah International Travel and Tourism Exhibition (JTTX), Jeddah.

FEBRUARY

2-4 (Monday-Wednesday): Saudi Media Forum, Riyadh.

2-4 (Monday-Wednesday): Women Leaders Summit and Awards KSA, Riyadh.

3-4 (Tuesday-Wednesday): RLC Global Forum Annual Meeting, Riyadh.

8-12 February (Sunday-Thursday): World Defense Show, Riyadh.

11 (Wednesday) Digital Transformation Summit Saudi Arabia (DTS), Riyadh.

11-14 (Wednesday-Saturday): JeddaDerm, Jeddah.

13-14 February (Friday-Saturday): Jeddah E-Prix 2026, Jeddah.

MARCH

31 March (Tuesday): Zatca’s 23rd E-invoicing integration wave deadline.

APRIL

27-29 April (Monday-Wednesday): Aluminum Arabia, The Arena, Riyadh.

OCTOBER

26-29 October (Monday-Thursday): World Energy Congress, Riyadh.

Signposted to happen sometime in 2026:

UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia.

Signposted to happen sometime in 2027:

The World Water Forum takes place in Riyadh.
The Ocean Race finishes in Amaala on the Red Sea.
Riyadh-Kudmi transmission line to be completed.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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