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By : Frank Kane

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:: “The train has left the station in Saudi Arabia, and it will keep moving on,” was the decisive verdict at a recent investment event in Dubai.

The speaker was Borys Dackiw, managing partner of the Baker & McKenzie Habib Al-Mulla law firm, formed after the 2013 merger of one of the biggest global law firms and the practice run by one of the Arabian Gulf’s most influential lawyers.

What he meant was that the momentum of transformation in Saudi Arabia’s economy, especially as it relates to diversification away from oil dependency, is well underway, and is unstoppable.

Dackiw knows a thing or two about capital market transactions and his opinion should be respected. He was speaking at a roundtable event held annually by information group Mergermarket, which tests the regional appetite for mergers and acquisitions (M&A), private equity deals and initial public offerings (IPO).

Inevitably, he was asked about the planned IPO of Saudi Aramco, the centerpiece of the Kingdom’s strategy to transform the economy by 2030 and whether the Kingdom’s policymakers were serious in their ambitions.

“People are asking whether the policy is for real. Well, I’ve already seen quite a few signs that it is having an impact. Registering a new company in Saudi Arabia could take up to eight months before, now it takes two months,” he said.

“The whole Aramco process could take time but there are lots of other things going on apart from Aramco. There have been reports of up to 100 companies thinking of IPOs in the region, with the majority in Saudi Arabia, and I know that lots have been undertaking ‘IPO readiness’ checks. The Saudis have done a great job in preparing the markets and in some way are ahead of the region,” he said.

Deals lawyer says the transformation of the Kingdom’s economy, especially regarding the diversification away from oil dependency, is now unstoppable.

Frank Kane

He added that transaction markets in the region had developed “a certain resilience” that would not be deterred by relatively high levels of debt or budget deficits.

“Gulf states can go to the debt markets if they need to, and they have not dipped into sovereign wealth funds and reserves as much as they could. The region realizes it has to push ahead and develop its own momentum,” he said.

Despite economic uncertainty related to the oil-price decline and geopolitical factors, the Mergermarket conference heard that deal-doers in the Gulf were more bullish than ever.

Steve Krouskos, global vice-chair of transaction advisory services at Ernst & Young (E&Y), asked: “Can heightened geopolitical uncertainties and buoyant M&A co-exist?”

“Yes. Because geopolitical concerns, though a mainstay feature of the boardroom, are overshadowed by more immediate and pressing risks and opportunities. Geopolitics may dominate the headlines but boards are laser-focused on countermeasures against technological disruption and seizing new routes to growth. These will often involve M&A,” he said.

A survey by E&Y found that 47 percent of executives expected deal activity to increase in the next 12 months, with transportation, consumer, mining, energy and power and telecommunications the sectors most likely to see increased activity.

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Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai.

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Disclaimer: Views expressed by writers in the Column section are their own and do not reflect RiyadhVision’s point-of-view.

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