$500m Saudi private equity fund aims to be FDI ‘magnet’

• Fund undergoing due diligence
• ‘Pre-wrapped’ deals to lure investors
• ‘Attractive’ investment pipeline

Saudi investors are preparing to launch a private equity fund designed to attract foreign investment into the kingdom, according to an executive involved in its formation.

The fund will target controlling stakes in sectors including healthcare, logistics, cold storage and data centres, with the aim of drawing international co-investment into Saudi businesses.

The fund’s backers say international appetite for Saudi Arabia remains strong, but overseas investors are more likely to commit capital alongside blue-chip Saudi partners that can source, structure, execute and manage proprietary deals.

The launch comes as Saudi Arabia seeks to broaden the sources of capital backing its Vision 2030 programme amid tighter public finances and lower oil revenues.

The Public Investment Fund, which has financed many of the kingdom’s giga-projects and the wider economic diversification programme, has been scaling back spending since 2024. Some project budgets were cut by as much as 60 percent after years of rapid expansion.

AGBI reported that the sovereign wealth fund is expected to cut capital expenditure by about 15 percent this year while continuing to prioritise time-sensitive investments linked to the 2030 World Expo and 2034 Fifa World Cup. As state funding becomes more selective, foreign direct investment has also remained below official ambitions.

The new fund is targeting at least $500 million and is undergoing due diligence with prospective limited partners, said Colie Spink, managing director and Middle East regional leader at US financial consultancy Alvarez & Marsal (A&M).

A&M has worked with the fund since inception, helping to shape its investment strategy, structure and establish the fund, and develop an actionable deal pipeline.

“This is a Saudi-based, Saudi-focused private equity fund, positioned to attract world-class strategic and financial co-investors,” Spink told AGBI.

“What international investors are missing is an abundance of pre-wrapped, nicely prepared deals. But we can develop the investment pipeline, put up half the equity, and bring value-added co-investors into the deals. I think in this way the fund can be a magnet [for FDI].”

A&M has invested in the startup, and will serve as strategic operating and value creation partner over the life of the fund, Spink said.

The fund has built an “attractive” investment pipeline, Spink said, and is actively looking at and bidding on opportunities, despite not yet completing its fundraising.

“Although we have not held a first close, thanks to the various principals involved we are fortunate to be able to look at and bid on opportunities in the meantime,” he said.

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Spink described the fund’s principals as “extremely seasoned originators, investors and asset managers” with deep local relationships and the ability to shape transactions, but declined to identify them because the fund has not yet officially launched.

The fund will focus on defensive, asset-backed sectors that “may also benefit from policy tailwinds”, he said.

“We are naturally targeting priority growth sectors in the kingdom, where there is clear need and demand in areas like cold storage and warehousing, or data centres or healthcare,” he said.

“We are not shy of operational complexity, and are targeting buyouts, roll-ups and platform rollouts in downside-protected sectors with stable to growing end-market demand and potential for operational value creation,” Spink added.

Saudi Arabia has been working to cultivate a domestic private equity industry to mobilise more private capital, while encouraging global investment firms to deploy more funds inside the kingdom rather than simply managing Saudi money abroad.

Established managers including Jadwa Investment and Alkhabeer Capital invest across sectors including healthcare, education, manufacturing and consumer businesses, while the government has helped seed local fund managers through initiatives such as Jada Fund of Funds.

Spink said the A&M-backed fund’s co-investment model would allow it to lead and participate in transactions well beyond its own size.

“We’re targeting a minimum of $500 million, but given the nature of the opportunities that we’re looking at through the fund, I would expect it to be responsible for driving a multiple of that in terms of equity deployed into the kingdom,” he said.