The asset management industry acts as a catalyst for economic activity as it attracts liquidity from investors with appetite for wide-ranging assets. This has facilitated domestic investors to take on exposure in the global financial markets and for many years now, it has attracted foreign investors to equities and bond markets of Saudi Arabia. More recently, also more innovative products were introduced to cater to the increased funding requirements of corporates and banks.
The industry offers an increase in wealth over time through acquiring, maintaining, or trading assets or portfolios while maintaining acceptable level of risk for unique investors. The industry serves high-net-worth individuals, institutional investors, government organizations, like pension funds, and retail investors.
In line with Vision 2030, the government of Saudi Arabia is undoubtedly fostering a favorable environment in Saudi Arabia for the industry to grow. Especially for its ambitious agenda of giga and mega projects, financing will be increasingly needed. The Financial Sector Development Program (FSDP) was also designed to further develop and internationalize the industry.
The Capital Market Authority (CMA) has taken initiatives to increase the depth of the capital market in line with Vision 2030‘s FSDP. Real estate continues to be the primary form of alternative investment in Saudi Arabia to provide a stable stream of income and capital appreciation over the medium to long-term. Real estate investment trusts and private real estate funds have gained popularity. CMA is working to facilitate fintech by developing the necessary infrastructure and supporting entrepreneurs and startups.
Important developments in the space of tax and Zakat include an approval by the Ministry of Finance of new Zakat rules for investment funds, effective since 1 January 2023. Despite not being subject to Zakat, funds must register with ZATCA and submit an information declaration within 120 days. Also, the Transfer Pricing Bylaws have been amended to include Zakat paying entities for fiscal years 1 January 2024 onwards.
In line with the Financial Sector Development Program, the government of Saudi Arabia is undoubtedly fostering a favorable environment in Saudi Arabia for the industry to grow. Especially for its ambitious agenda of giga and mega projects, multiple products are introduced to support these liquidity needs and to cater to evolving investor requirements.
With experience built on a wealth of knowledge accumulated through its audit, tax and advisory work for asset management firms around the globe and in the Kingdom, KPMG has the depth of expertise to help investment managers through the challenges that lie ahead for long-term growth and to support them as they look to grow revenue and increase efficiency.
To provide a directional overview of how the asset management industry has performed, this publication presets a detailed analysis of the cumulative performance of twelve large asset management firms, as well as an overview of the emerging themes and regulatory landscape of relevance for the sector. This is our second edition on this subject and we look forward to your feedback.