Investment Banking in Saudi Arabia
Citigroup recently received its license to provide a full range of investment banking, debt and equity capital markets, markets and securities research capabilities to local and international institutional clients. Likewise, Goldman Sachs is looking into obtaining a Saudi equities license. Credit Suisse intends to apply for a full banking license and JPMorgan is adding bankers.
The Top Bulge Investment BanksTop Bulge Investment BanksTop 10 bulge bracket investment banks are - Blackstone, Goldman Sach & co, Morgan Stanley, J.P Morgan Chase & co, Bank of America Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, HSBC, UBS. want to set up shops in Saudi Arabia. However, should you consider Investment Banking in Saudi Arabia? What is the market like? How much would you make as an investment banker in Saudi Arabia? How can you get an entry into the Saudi Arabian market? You will get to know all of the questions and more in this article.
Let’s have a glance at the sequence –
- Saudi Arabia Investment Banking Market Overview
- Investment Banking in Saudi Arabia – Services Offered
- Top Investment Banks in Saudi Arabia
- Investment Banking in Saudi Arabia – Recruitment Process
- Investment Banking in Saudi Arabia – Culture
- Investment Banking in Saudi Arabia – Salary
- Investment Banking in Saudi Arabia – Exit Opportunities
Here we discuss Investment Banking in Saudi Arabia, however, if you want to know more about M&A, you can look at M&A Course.
Saudi Arabia Investment Banking Market Overview
- In Saudi Arabia, the finance market is underdeveloped. If someone from developed markets goes to work in the Saudi Arabian investment market, the chances of making a quick name are pretty easy.
- Having said that, there is another side of the coin! Under-developed market means huge growth potential. And that means one can expect an influx of huge recruitments in years to come.
- Most deals in Saudi Arabia are now IPOs. M&A deals are still in the development stage. However, that’s beginning to change. If we look at the future of Saudi Arabian investment banking, there would be huge growth in M&A deals as many companies are beginning to consolidate.
- So, as a job seeker of investment banking jobs, Saudi Arabia can be a great place to move up the ladder. You will be receiving less resistance in growth since the structure is flatter; and if you are good (technically and in sales), you will go to the top of the rung very easily (as Saudi Arabian recruiters often mention that good investment bankers are not easily found in their country).
Investment Banking in Saudi Arabia – Services Offered
As Saudi Arabia is an emerging market, the potential for growth is havoc. Thus, investment banks in Saudi Arabia offer various services. Let’s have a glance at the top 4 services these banks provide –
- M&A Advisory: Mergers and Acquisitions are offered by almost all of the investment banks in Saudi Arabia. Since M&A is yet to surge in the investment market, many investment firms want to tap into the opportunities. To ensure that the synergy is beneficial to the companies, these investment banks offer M&A advisory at all levels.
- Private Placements: Private placements are one of the top five services offered by investment banks in Saudi Arabia. Through private placements, top-notch investment banks in Saudi Arabia help sell complex securities to sophisticated clients who understand the potential risk and reward.
- Corporate Finance Advisory: In Corporate Finance Advisory, investment banks provide services like deal structuring, risk management, liquidity, credit rating, and capital structuring.
- IPOs: Most of the investment banks in Saudi Arabia offer an initial public offering and initial private offering to organizations looking to enhance their funds to finance their extended businesses. These investment banks are mainly focused on SMEs and help them bridge the gap from a small company to medium-sized business.
List of Top Investment Banks in Saudi Arabia
The following are few firms that stand out as investment banks in Saudi Arabia. Let’s have a look at them briefly –
- Alisthitmar Capital: This is one of the topmost boutique investment banks in Saudi Arabia. The firm was established in the year 2007 in Riyadh and it offers various services like mergers, acquisitions, corporate advisory, capital raising, and divestitures. Visit Official Website
- Al-Khabeer Capital: This is one of the topmost boutique investment banks in Saudi Arabia that offers financial advisory services. The firm was founded in the year 2008 in Jeddah and it offers various services like debt and project finance, securitization, leasebackLeasebackLeaseback refers to a financial arrangement whereby the company that has sold the asset can take it back on lease from the buyer. Thus, the sale-leaseback facilitates the former owner to utilize the asset while its ownership lies with the purchaser. , and underwriting services. Visit Official Website
- AlNefaie Investment Group: This is one of the top-notch investment banks in Saudi Arabia that offers financial advisory services. The firm was founded in Jeddah and it offers various services like IPO, mergers, acquisitions, private placements, corporate restructuring, brokerage, and financial resources management services. Visit Official Website
- BMG Financial Group: BMG Financial Groups offers investment banking to many clients including government agencies, private companiesPrivate CompaniesA privately held company refers to the separate legal entity registered with SEC having a limited number of outstanding share capital and shareowners. , and investor groups. It was established in Jeddah and it offers corporate restructuring services, private placements, mergers & acquisitions, and IPOs. Visit Official Website
- Falcom Financial Services: Falcom Financial Services offer investment banking, wealth management, and securities trading services. It was established in 2007 in Jeddah and it offers mobile-based financial trading securities services and discretionary portfolio management. Visit Official Website
- Financial Transaction House: This is one of the topmost boutique investment banks in Saudi Arabia. The firm was established in the year 1994 in Jeddah and it offers various services like mergers, acquisitions, IPOs, financial and corporate restructuring, and private placements.
- Ithraa Capital LLC: This is one of the topmost boutique investment banks in Saudi Arabia. The firm was established in Riyadh and it offers various services like mergers, acquisitions, IPOs, financial and corporate restructuring, and private placements. Visit Official Website
- Jadwa Investment Company: Jadwa Investment Company is one of the topmost boutique investment banks in Saudi Arabia. The firm was founded in 2006 in Riyadh and it offers various services like stock trading services, securities brokerage, mergers, acquisitions, IPOs, financial and corporate restructuring, and private placements. Visit Official Website
- Middle East Financial Investment Company: This is one of the top-notch investment banks in Saudi Arabia that offers financial advisory services. The firm was founded in Riyadh and it offers various services like debt raising, initial public & private offering, mergers, acquisitions, private placements, project financeProject FinanceProject Finance is long-term debt finance offered for large infrastructure projects depending upon their projected cash flows. Moreover, an investor has to form a Special Purpose Vehicle (SPV) to acquire the same. , corporate restructuring, brokerage, financial engineering, and financial resources management services. Visit Official Website
- Saudi Hollandi Capital: Saudi Hollandi Capital is the subsidiary of Saudi Hollandi Bank. SHC is one of the top-notch investment banks in Saudi Arabia that offers financial advisory services. The firm was founded in Riyadh and it offers various services like IPO, mergers, acquisitions, private placementsPrivate PlacementsPrivate placement of shares refers to the sale of shares of the company to the investors and institutions selected by the company, which generally includes banks, mutual fund companies, wealthy individual investors, insurance companies., corporate restructuring, brokerage, and trading.
- Swicorp: This firm is one of the top-notch boutique investment banks focused on the Middle East and North Africa. It was founded in 1987 in Riyadh and it offers debt and equity financingEquity FinancingEquity financing is the process of the sale of an ownership interest to various investors to raise funds for business objectives. The money raised from the market does not have to be repaid, unlike debt financing which has a definite repayment schedule., mergers, acquisitions, capital structuring, and corporate restructuring advisory services. Visit Official Website
- The Investor for Securities Company: IVSC is one of the top-notch boutique investment banks focused on the Middle East and North Africa. It was established in Riyadh and it offers loan syndicationLoan SyndicationA loan syndication is an arrangement in which multiple lenders pool their resources to lend to a single entity. It is done to meet a borrower's large requirements, and the lenders are typically banks and other financial institutions., debt and equity private placements, mergers, acquisitions, capital structuring, and corporate restructuring advisory services. Visit Official Website
Investment Banking in Saudi Arabia – Recruitment Process
The recruitment process is very distinctive in Saudi Arabia than in the USA/UK.
Most of the recruitment happens by head-hunters. So here’s a process you should follow –
- Go for a couple of internships: In Saudi Arabia, the market is still emerging. And big banks are looking for interns and permanent bankers who can help them take the leap. There is no dearth of opportunities, but there is a scarcity of employable candidates. Whenever you look for internships, look for top-notch investment banks and go for summer internships (most popular in Saudi Arabia). After you complete your internships, you can look for investment banking jobs in Saudi Arabia. Also, have a look at How to Get Investment Banking Internship
- Networking is everything: Since most of the investment banking jobs Saudi Arabia is unadvertised, networking is the key to receiving news about interviews. Whenever you get an opportunity to network, do it without any hesitation. The maximum you will not get a “yes”. Go through the list of the alumni network and contact them directly, take them to coffee/lunch or send them cold emails. And also use LinkedIn to connect with investment bankers who are already pursuing their careers in small/big investment banks in Saudi Arabia.
- Connect with head-hunters: Your best bet is head-hunters or ex-peer groups, e.g. your ex-boss/ex-colleague. If you are new in the business, go connect with head-hunters. Your job is to impress them so much that they recommend you for the next round of interviews. To impress the head-hunters, you need to have impeccable technical skills, and your personality also should be attractive (communication, attitude, and dressing sense). If you can clear the “fitment” round and can impress the head-hunters, the rest of the process would be easier.
- Interviews: In Saudi Arabia, clients don’t worry too much about minute details. Thus, the focus of the interview is mostly conceptual. If you are clear on concepts, you would be able to clear most of the rounds. However, do your homework and be ready for any technical question/case study analyses. They will give you a few days and will ask you to present a case (especially on financial modeling/valuation). The last round of the interview would be with the partner and the MD of the company. And only the best candidates would see the light of the day.
Investment Banking in Saudi Arabia – Culture
- The culture in the Saudi Arabian market is quite different than the working culture of the USA/Europe. In the Saudi Arabian investment banking market, things happen at a slower pace. The working environment is such that people rarely move things fast. And as a result, getting things done quickly isn’t an easy task.
- So, if you’re shifting from the USA/European work culture, you would face issues in the beginning. And you need to micro-manage everything to move things quickly.
- And unlike Europe/USA, people rarely work long hours in Saudi Arabia. It has been seen that the working hours are like any commercial or retail bankRetail BankRetail banking or personal banking refers to the financial services offered by the financial institutions exclusively to the individual clients. The consumer banking provides personal loan, savings account, debit cards, credit cards, locker, etc.. People leave the office at 5:30 p.m. And they work 50-60 hours a week; there are rarely 90-100 hours of work per week.
- There are two causes that enable investment bankers in Saudi Arabia to work less. First, most of the clients here are not very sophisticated and less demanding. So there is no rush in getting things done quickly. Second, investment bankers in Saudi Arabia don’t pitch ideas actively. As a result, you don’t need to work 100+ hours a week to provide for the demands of the clients.
Investment Banking in Saudi Arabia – Salary
If you have ever worked in the USA/UK as an investment banker, moving to Saudi Arabia would be a great decision at least in terms of salaries.
You will receive similar basic earnings as you would in London/the USA, but the bonus you would earn would be double. Moreover, you don’t need to pay any taxes. Any taxes mean – no income tax, no sales taxSales TaxThe government levies sales tax on the consumption of various goods and services as the percentage added to the product and services from which the government earns revenue and does the company's welfare. In the United States, 38 different states have different taxes, from Alaska (1.76%) to Tennessee (9.45%)., no VAT whatsoever.
That means all that you earn in Saudi Arabia as an investment banker is yours to keep. It has been seen that if you maintain a decent lifestyle, you will be able to keep at least 50% of your total earnings after paying for rent, food, basic amenities, and traveling.
Now, let’s look at the salary details of investment bankers in Saudi Arabia.
According to PayScale.com, here’re the details of salaries based on job types –
The above graph gave us a fair idea of how much you can expect to earn at each job position. Now, let’s look at the basic salary of investment banking in Saudi Arabia and bonus by years of experience –
From the above graph, we can see that the salary in investment banking hits a saturation point at 10+ years of experience. When you have less than 10 years of experience, your basic salary would be proportionate to the years of experience you have. But once you hit 10 years, it will start to become inversely proportional.
From the above graph, we reach the same conclusion. Till 10 years, a bonus is proportionate to the years of experience. After 10 years of experience, even the bonus starts to saturate.
Let’s dive into the skills and see how different skills affect the salaries in investment banking in Saudi Arabia–
According to the above graph, the most valuable skill that has greatly affected the basic salaries is contract negotiation and the least valuable skill is Microsoft Office/Word.
The salary of an investment banker is also affected by gender. Have a look at the below chart –
We can easily see that male investment bankers earn significantly more than female investment bankers.
So, here’re a few important points that you should keep in mind in terms of salaries –
- There is no tax, so you would be able to save a lot more in Saudi Arabia.
- Your salary at entry level would be around SAR 140,000 to 160,000.
- Years of experience matter a lot. Till 10 years, your salary will increase proportionately and then it will saturate and drop.
- If you can develop contract negotiation skills, that is most valuable.
- Gender also affects salaries.
Investment Banking in Saudi Arabia – Exit Opportunities
The popularity of “exit opportunities” is prevalent in the USA, but no so much in the UK, London, the Middle East, and Saudi Arabia.
And leaving a great job doesn’t make sense in Saudi Arabia.
Think about this. You have a job (investment banking) which is great. You are able to make a name for yourself as a banker. You have been earning significantly well. Whereas your peers in London or America are earning the same money and paying a lot of taxes, you have been giving none. Moreover, instead of working 100+ hours a week (most prevalent in another part of the world), you are just working 50-60 hours a week.
Why would you be foolish enough to let go of a job with such benefits?
Investment bankers in Saudi Arabia think in a similar way and no-one is ready to let go of investment banking jobs after a few years.
But a smaller percentage wants more challenges in their lives and would like to explore different fields. Thus, they exit investment banking and choose a different career.
In Saudi Arabia, if you have been working in investment banking for a while, you literally have two options. First, you can go to top-tier companies in investment banking. Second, you can go for private equity – a top-tier fund.
Since the work culture is similar (you will get 52 holidays in a year) and work ethic is standard (50-70 hours a week), in private equity, rarely you would see any changes (other than nature of work).
Also, have a look at Investment Banking Exit OpportunitiesInvestment Banking Exit OpportunitiesAmong the several exit options available to investment bankers are: 1.Private Equity 2.Hedge Funds 3.Strategy Consulting 4.Fin-Tech 5.Advisory for large corporates.
- After discussing the whole thing, we have one merit and one demerit of working in the investment banking industry in Saudi Arabia.
- The advantage is working fewer hours and earning much more in tax-free income.
- The disadvantage, on the other hand, is if you continue to work fewer hours, you won’t be having that drive in the future to work 100+ hours if required.
- Taking these two into account, you can decide whether Saudi Arabia is a good place to work or not. A temporary contract (let’s say for 2 years) is what you can aim for in the beginning and then you can plan ahead for the future.
This has been a guide to Investment Banking in Saudi Arabia, their services offered, the recruitment process, their culture, top investment banks in Saudi Arabia, salaries, and exit opportunities. You may also have a look at the following article for learning more about Investment Banking –