Buyouts Are Dominating: Is Saudi Arabia’s Economy Entering Its Consolidation Era?
Saudi Arabia’s private equity market changed in an important way in 2025. Buyout deals became the most common type of investment again for the first time since 2023. They made up 56% of all deals, the highest level in five years. These deals also represented 89% of the total disclosed investment value, which reached nearly $2 trillion, according to data from MAGNiTT and the Saudi Venture Capital Company.
This trend shows that Saudi Arabia’s investment market is moving into a new stage. In the early years of Vision 2030, most investments focused on startups and venture capital. Now, investors are paying more attention to buying and growing existing companies, improving governance, and helping established businesses expand.
Buyouts take the lead
Buyout deals have always been important in Saudi Arabia’s private equity market. In 2023, they represented 99% of the total investment value. However, their share dropped to 82% in 2024 as the market adjusted.
In 2025, buyouts returned strongly. This change is also connected to the global recovery in private equity. Around the world, buyout activity increased as financing conditions improved and company valuations stabilized.
Globally, private equity deal value reached $2.1 trillion in 2025, the highest level since 2021. Large transactions worth more than $10 billion played a big role in this growth, according to KPMG. In Saudi Arabia, disclosed private equity investment value reached $2.2 billion.
Rayan Alrasheed, CEO of Artal Capital, said Saudi Arabia’s private investment market has matured over the past few years.
According to him, the strong growth that started with Vision 2030 has now developed into a more structured and professional market. Investors are focusing more on careful capital allocation and stronger governance.
Philip Bahoshy, CEO of MAGNiTT, shared a similar view. He said Saudi Arabia’s private equity market is moving from a period of rapid growth into a stage of stabilization and consolidation.
Between 2021 and 2023, investment deals increased quickly. However, since 2024, investors have started focusing on more careful investment strategies and smaller deals.
Large buyouts drive market value
One major deal that shows this shift was the $1.97 billion purchase of a majority stake in MBC Group by the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund.
Through this transaction, PIF gained a 54% stake in the regional media company. The deal alone represented nearly 90% of the total disclosed private equity investment value in 2025.
This highlights how strategic buyouts are becoming more important in shaping Saudi Arabia’s corporate sector.
The investment also supports Saudi Arabia’s Vision 2030 plan to diversify its economy beyond oil. By investing in media and entertainment, PIF aims to strengthen local content production and expand Saudi Arabia’s cultural influence across the Middle East and North Africa.
As the kingdom continues to develop its entertainment industry with film festivals, tourism projects, and cultural initiatives, the MBC acquisition places PIF in a strong position as a major private equity investor.
Market experts say deals like this show how Saudi Arabia’s private sector is becoming more institutionalized.
Turki AlDayel, CEO of Growth Catalyst Investment Company, said the combination of growth investments and buyout strategies is helping strengthen Saudi Arabia’s capital markets.
Private equity deal activity has fluctuated over the past few years. There were 43 deals in 2023, but this number dropped to 19 in 2024 due to global economic slowdowns. In 2025, the number recovered to 25 deals.
The share of buyouts by deal volume has also changed over time. Buyouts represented 56% of deals in 2021, 48% in 2022, 56% in 2023, 37% in 2024, and 56% again in 2025. Growth investments accounted for around 44% of deals in 2025.
By sector, media and entertainment dominated investment value with 89%, followed by financial services at 6% and healthcare at 5%.
Family businesses create investment opportunities
Another reason for the increase in buyouts is the structure of Saudi Arabia’s private sector. Many large companies in the country are still owned by families.
For decades, Saudi Arabia’s non-oil economy was built by family business groups that expanded during the oil boom of the 1960s and 1970s. Today, many of these companies are going through a generational transition as founders pass leadership to the next generation.
This situation creates opportunities for private equity investors. These investors can partner with family companies and help them improve governance, management structures, and operational efficiency.
Research by KPMG shows that about 95% of companies in Saudi Arabia are family-owned. These businesses contribute around 66% of the country’s GDP.
A 2025 study by INSEAD found that 23% of founders are over the age of 55, and 59% do not have a clear succession plan. In addition, 75% of family businesses do not have formal family governance structures.
Only 5% of family businesses survive to the third generation. This often happens because of cultural and family conflicts, including disagreements over leadership and trust issues.
Industries most affected by these transitions include construction, manufacturing, retail, and hospitality, which were key sectors during the oil boom years.
Private equity firms are now actively targeting these companies by offering capital, management expertise, and structured succession solutions.
Regulatory reforms help investors exit
Government reforms are also encouraging more private equity investment by making it easier for investors to exit their investments.
Philip Bahoshy said the increase in buyout deals shows that investors have greater confidence in the governance and operational strength of Saudi companies.
The Capital Market Authority has introduced several reforms to improve Saudi Arabia’s financial markets, including changes to the Saudi Exchange (Tadawul).
One important reform will take effect in February 2026. It will remove the Qualified Foreign Investor (QFI) framework, which previously required foreign investors to manage at least $500 million in assets before they could directly invest in Saudi markets.
Removing this rule is expected to attract more international investors and make it easier for private equity funds to exit through public listings.
Although exit markets in the region are still developing, investors are becoming more confident in supporting long-term business improvements.
Saudi IPO market gains strength
Saudi Arabia’s stock market is already the leading destination for IPOs in the Gulf region.
In 2025, Tadawul accounted for 79% of all IPO proceeds across the GCC, making it an important exit route for private equity investors.
Although total private equity investment value declined slightly to $2.2 billion in 2025 from $2.8 billion in 2024, the number of active investors increased significantly. The number of unique private equity investors rose by 85%.
Domestic firms have played a major role in this growth. For example, Alareeb Holding completed three acquisitions, including purchasing an 80% stake in Two Side Production and acquiring Future Integrated Management.
Meanwhile, Cultural Assets Group launched the $226 million Osoul Private Investment Fund and acquired the Riyadh-based project management firm Beyond.
These deals show that investors are increasingly focusing on consolidating companies within specific sectors.
Investment strategies shift toward profitability
The changes in Saudi Arabia’s private equity market also reflect global investment trends.
As interest rates rise, investors are becoming more careful with growth-stage investments. Venture capital firms are now focusing more on sustainable business models and profitability instead of rapid expansion.
Private equity investors are targeting companies that already generate strong cash flow and can grow further through operational improvements or strategic mergers.
For example, sectors like enterprise software continue to attract investment because they offer predictable revenue through subscription models and can scale efficiently.
Economic outlook
Saudi Arabia’s economic outlook remains positive and is expected to support continued investment.
According to Riyad Capital, the Saudi economy is projected to grow 4.4% in 2026, while non-oil sectors are expected to expand by more than 4% annually.
As the country reaches the midpoint of its Vision 2030 reform program, analysts believe the rise of buyout deals shows that the Saudi economy is entering a more mature phase.
Instead of focusing mainly on startups, investors are now concentrating on strengthening and expanding established companies that form the backbone of Saudi Arabia’s private sector.
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