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Abdullah M. Alfouzan Chairman, The Investor for Securities Co. Riyadh, Saudi Arabia April 2014

Focus Session on Country Investment Prospects Saudi Arabia as destination and source of asset management capital. Abdullah M. Alfouzan Chairman, The Investor for Securities Co. Riyadh, Saudi Arabia April 2014. Saudi Arabia, a destination for global capital. Approaching $1 trillion GDP

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Abdullah M. Alfouzan Chairman, The Investor for Securities Co. Riyadh, Saudi Arabia April 2014

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  1. Focus Session on Country Investment Prospects Saudi Arabia as destination and source of asset management capital Abdullah M. Alfouzan Chairman, The Investor for Securities Co. Riyadh, Saudi Arabia April 2014

  2. Saudi Arabia, a destination for global capital • Approaching $1 trillion GDP • Consistent positive GDP growth • Gross national savings among highest in the world • Highly urbanized, young population • $717 billion foreign currency reserves • > $120 billion inward Foreign Direct Investment, 2008-2011 • An ancient culture, but also thoroughly modern The Investor for Securities Co.

  3. Saudi capital markets, young and growing • Capital Market Law, 2003 • Capital Market Authority (CMA), 2005 • CMA enforces a clear line between banking & investments • Tadawul, national stock market, > $510 billion total market capitalization • More than 11 million investors, 159 traded companies, growing sukuk market • Tadawul up: • 11% YTD, • 33% YoY(31 March 2014) The Investor for Securities Co.

  4. Saudi financial intermediaries • 83 active CMA-licensed investment companies • 10 linked to domestic Saudi banks • 19 to foreign banks • 13 to foreign investment companies • > 30 Saudi investment companies are fully independent & local • Top foreign names in Saudi Arabia: JP Morgan, Merrill Lynch, BNP Paribas, Credit Suisse, HSBC, Deutsche Bank, KKR, Lazard • Top domestic names: The Investor, Falcom, Jadwa, Alkhabeer • Core businesses: Investment banking, brokerage, asset management • 256 mutual funds, > $27 billion AUM The Investor for Securities Co.

  5. Inward investments into Saudi Arabia • Market preparing for King Abdullah’s signature, replace existing swap arrangement • Draft legislation prepared, awaiting only final royal approval • CMA chairman wants short delay, time for upgrading market systems • At one point SAMBA’s Saif Saudi fund was largest country fund in the world • Portfolio rebalancing, eventual inclusion in MSCI, creates demand • Some analysts predict up to $10 billion foreign investor demand for Tadawul listings (up to 20% of market cap) Key drivers: Industry & Real Estate The Investor for Securities Co.

  6. Next step, global investment in Saudi real estate • Currently restricted, no foreign investment in Saudi real estate sector • Expected yields of 25% IRR or more in almost any sector, any region of Saudi real estate • Exceptions: GCC nationals, some expatriate and international investors allowed • Large middle class, purchasing power in SAR 500,000 to SAR 1 million range • Perhaps one of the best potential investments in Saudi Arabia • Housing demand today: Over 300,000 new units required • Total Saudi construction spending 2012-2013 was > $225 billion “With its young and expanding population, Saudi Arabia should remain the most buoyant [real estate] market, in line with its overall economic development plan….the recent approval of the mortgage law should help to drive growth in residential construction in response to the current housing shortage” President MENA, BofA Merrill Lynch The Investor for Securities Co.

  7. Saudi Arabia, a source for global capital • Global demand for Islamic investments, > $3 trillion • Existing $3.5 trillion AUM owned by Muslims, almost none sharia compliant • Estimated $200 billion under management in Switzerland owned by Saudis • Most Muslims live a sharia life, want sharia-compliant investing King Abdullah Financial City The Investor for Securities Co.

  8. Saudi Mega Transport & Infrastructure • 230 billion Dollars worth of infrastructure projects are expected to be completed by 2014. The Investor for Securities Co.

  9. King Abdullah Economic City • With a total development area of 173 km². • The total cost of the city is 86 billion Dollars. • The city is located along the coast of the red sea, around 100 km north of Jeddah. The Investor for Securities Co.

  10. Holy Mosques expansion project • The total cost of the expansion is 128 billion Dollars. • It doubles the current capacity from 48 thousand persons to reach 105 thousand persons. The Investor for Securities Co.

  11. Saudi Aramco projects: • Aramco owns nearly 80 billion Dollards worth of projects under construction or planned in the field of oil and gas. • in addition to infrastructure projects associated with it, such as power plants in the same oil installations. The Investor for Securities Co.

  12. Princess Nora University for Girls: • The engineering and construction cost exceeds 22 billion riyals. • The total area estimated at 8 million square meters. The Investor for Securities Co.

  13. King Abdullah International Gardens: • This is the largest covered park in the world. • Saudi Arabia is planning to create gardens in the city of Riyadh at a cost of more than one billion Saudi riyals. The Investor for Securities Co.

  14. Riyadh Metro Stations: • Metro of Riyadh will create six metro lines main penetrate the Saudi capital Riyadh from all directions. • Includes 85 stations, at a cost of 22.5 billion dollars, is scheduled to run in 2018. The Investor for Securities Co.

  15. King Abdullah Financial District: • The area of ​​the center 1.6 million square meters, It is located north of the city of Riyadh. • The project is estimated to cost 29 billion Saudi Riyals ($7.8 billion). The Investor for Securities Co.

  16. Ras Al-Khair projects • Ras al-Khair, also known as Mineral Industrial City, lies 90 kilometres north of Jubail and is being developed by the Royal Commission for Jubail. • The cost of Ras Al-khair projects is 4 billions dollars. The Investor for Securities Co.

  17. Sadara Chemical Corp • The biggest chemicals complex ever to be built in a single phase. • The $19.3bn complex will produce up to three million tonnes once it completes. The Investor for Securities Co.

  18. The Investor for Securities Co. • Key player in Saudi capital markets • Founded 2007, SAR 200 million paid-in capital • Profits 2013, > SAR 82 million • > 60 professional staff • > SAR 11 billion AUM (CHF 2.9 billion) • Strong presence in Saudi equity markets, private placements and real estate The Investor for Securities Co.

  19. Conclusion • Capital flows from and to Saudi Arabia will continue to be important • Increasingly sophisticated investors & businesses • Saudi Arabia is a major destination for investors in emerging markets • Foreign direct investment, particularly in future Saudi real estate funds • Portfolio investment in the Saudi stock and sukuk markets, Tadawul • Foreign bankers are welcome, but only with CMA regulatory approvals • Our Investment Services will capture an important part of global Saudi portfolio investments • The Investor for Securities Co. is ideally placed for both inward and outward Saudi investments The Investor for Securities Co.

  20. Thank you. Abdullah M. Alfouzan Chairman The Investor for Securities Co. Aljumaiah Center, King Fahd Road P.O. Box 67838 Riyadh 11517 Saudi Arabia Telephone: +966-11-200-7002 x 333 E-mail:a.alfouzan@theinvestor.com.sa Website: www.theinvestor.com.sa The Investor for Securities Co.

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