Opportunities for ‘distressed investors’ as Saudi companies restructure

International and regional distressed investors looking at buying debt in Saudi businesses are becoming more active as new bankruptcy laws and reforms take shape in Saudi Arabia. 

Paul Gilbert, Middle East managing director at Alvarez & Marsal, said bankruptcy processes were “being very predictable”, which was an “important factor for inward investment into the country”. 

Saudi Arabia is the second-largest US dollar debt issuer in emerging markets outside China. The total debt capital market in the GCC is likely to cross $1 trillion this year after reaching $940 billion in the first quarter of 2024.

This provides an opportunity for investors as private debt funds are increasingly becoming an attractive asset class in the kingdom.

• Saudi Arabia’s debt rule changes could increase sales
• Saudi Arabia cuts more red tape to tempt foreign investors
• Riyadh revamps investment law as it seeks giga-project cash

In addition inflationary pressures and uncertainty as a result of regional conflicts continue to put pressure on consumer businesses. 

“FMCG [fast-moving consumer goods], for example, is seeing soft demand at the moment. It’s not getting worse, but it’s not getting better,” he said. 

Retail, agricultural supplies and food and beverage are other industries contributing to the rise of distressed companies in the country. 

Watch the full video to find out why Saudi companies should consider restructuring