For private equity investor Imad Ghandour changes in Saudi Arabia's laws are prompting a rethink and his firm may buy, for the first time, minority stakes in the kingdom's companies. It is exactly an effect the country's leaders are aiming for as they seek to woo billions of dollars in new capital to wean its economy off fossil fuels.
On Dec. 16, the kingdom's first written civil code came into effect, replacing a system where judges would have full discretion in ruling on commercial disputes using Islamic law, sharia, as guidance. That created uncertainty for investors like Ghandour, who until now would only invest in majority stakes in Saudi companies.
The new framework "allows us to protect ourselves better and more predictably than under the old law," said Ghandour, co-founder and managing director at CedarBridge Capital Partners, which has over $140 million in assets in Europe and Middle East.
The new civil transactions law is part of Saudi Arabia's Vision 2030 reform plan to pivot its economy away from oil and gas sector.
Riyadh in 2021 set target of reaching $100 billion in foreign direct investment by 2030, which appears still far off with most recent data showing just under $33 billion in inflows in 2022.