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Saudi fintech investment prospects good, says KPMG Al Fozan

Firm expects Saudi Arabia's fintech market to continue to attract investment

Saudi's fintech market has good prospects, says KPMG Al Fozan & Partnters.
Saudi's fintech market has good prospects, says KPMG Al Fozan & Partnters.

Fintech investment in Saudi Arabia should remain positive this year, according to KPMG Al Fozan & Partners.

The company says that Saudi's young, tech-savvy population will drive demand, while developments in Fintech regulation will also have a positive impact on prospects for the sector.

"We expect growing investor interest in the fintech offerings over time which will transform the Kingdom as the Middle East and North Africa's (MENA) primary market," said Islam Al Bayaa, Head of Advisory at KPMG Al Fozan & Partners.

KPMG noted that the Saudi Arabian Monetary Authority's (SAMA) FintechSaudi and the recent decision to set up a sandbox regulatory environment will have a positive impact on fintech investment and enable foreign and regional investors to invest in these companies, he added.

Globally, KPMG said fintech funding totaled $112 billion last year, up 120% from $50.8 billion in 2017, fueled by mega M&A and buyout deals.

Deals in the second half of 2018 were topped by Blackstone's $17 billion investment in Refinitiv, the $3.5 billion acquisition of Blackhawk Network by Silver Lake and P2 Capital Partners, the $3.4 billion buyout of VeriFone by Francisco Partners, and the $2.2 billion acquisition of iZettle by PayPal, the report added.

Fintech deal volume declined markedly in the second half of 2018, but still reached 2,196 deals for the year, up from 2,165 in 2017. Increasing geographic diversity of Fintech VC funding continues to help drive deal volume, even as larger Fintech hubs see more concentrated investment in larger deals.

"The growing deal sizes, higher levels of M&A activity and the geographic spread of deals all highlight the increasing maturation of the Fintech sector on a global scale," said Al Bayaa. Specialized reports are showing an increasing trend in Fintech M&A transaction compared to other industries, in which the number of Fintech related transactions have exceeded the number of transactions in e-commerce and IT.

He added: "Fintech investment expected to remain strong in 2019 despite increasing uncertainty, while geopolitical volatility and trade concerns could put a damper on fintech investment in 2019, the strong diversity of global fintech hubs, and the strengthening of subsectors, should contribute to continued growth. AI and automation are expected to remain very hot for areas technology investors."