Lumina Capital: Saudi FDI to Touch 2011 Peak This Year

Saudi Arabia has seen a rapid increase in foreign direct investments this year, recording the highest inflow since the US$16.3 billion gains of 2011, according to Andrew Nichol, partner of Dubai-based Lumina Capital Advisers. “That’s the second highest amount of foreign direct investment into the Kingdom in the last decade; the last time it exceeded this was in 2011,” Nichol said in an exclusive interview with Arab News. According to Nichol, the FDI outlook is robust as the Kingdom is estimated to be the fastest-growing economy in 2022. “I think this is going to be a record year. We’ve seen confidence. If we look at the global tailwinds and the challenges the markets face, you’ll find that investors are looking very practically at this region, and I do expect this year to be a fantastic year for FDI,” he added. Andrew Nichol, partner of Dubai-based Lumina Capital Advisers. According to a report issued by the International Monetary Fund, the Kingdom is likely to be one of the world’s fastest-growing economies this year, thanks to its sweeping pro-business reforms, a sharp rise in oil prices, and a recovery from a pandemic-induced recession in 2020. The IMF reported that gross domestic product is expected to expand by 7.6%, the fastest growth in almost a decade.

Growing venture capital investments

Bullish on the Kingdom, Lumina has advised several series A, B and C funding rounds for regional and international startups. The region’s venture capital scale has been multiplying in the past three years. For example, those who invested US$5 million in the initial rounds are today investing US$20 million to US$30 million in the same round levels. “Those rounds have been getting larger and larger. So, what used to be a US$5 million to US$10 million series A have become US$20 million to US$30 million,” Nichol said. According to Nama Ventures, a pre-seed venture capital fund focused on fueling innovation in the Middle East and North African region, in 2021 alone, venture capital provided more than SR630 million (US$168 million) to new firms in the country. Nichol believes that the region will see many more startups reaching the billion-dollar market valuation or becoming unicorns in the near future. “The region has been very successful in importing skills and technologies. There have been a few big unicorns, and we’re going to continue to see that as the Middle East becomes a real hub for innovation,” he said.

Metaverse in spotlight

Lumina considers the GCC states a highly innovative region with a lot of liquidity, where investors are more selective in allocating their capital. To Nichol, any opportunity that combines digital and links people together is a potential success, including investing in the metaverse. The financing advisory firm is currently advising on the region’s first deal involving a leading global metaverse creator. “We are working on our first metaverse transaction, and this is a multi-trillion-dollar opportunity,” he said. Founded in 2013, Lumina Capital Advisers provides services in mergers and acquisitions, capital restructuring, equity capital, debt advisory and infrastructure project financing. The firm closes between 15-20 transactions yearly, with an average deal size between US$20 million and US$100 million. “We’re not an asset manager. We’re not directly investing our capital, but we advise our clients on either making direct investments or selling assets within their portfolios,” Nichol added.