The United Kingdom’s Fintech industry is the largest in Europe, which attracted $4.9b investment in 2019 across 359 deals. There is also a coherent Fintech Sector Strategy, published in 2018, which outlines the actionable plan to make the UK a European and global centre for Fintech. Linking that with the Gulf Cooperation Council (GCC) region, how can the UK’s leading fintech position in the world be a bridge to Saudi Arabia, the largest economy in the region?
From the same source above, a recent Linkedin post by Simon Penney, who is Her Majesty’s Trade Commissioner for the Middle East, Afghanistan and Pakistan at the UK’s Department for International Trade, further showed the opportunity of why the UK wants to be the Arabian Gulf’s partner in fintech. Recently, according to the article he wrote, “Our UK Department for International Trade (DIT) team in Saudi Arabia hosted a Virtual UK-KSA Fintech Week recently with key stakeholders and innovators from the industry in both countries to discuss best practice on developing a vibrant Fintech ecosystem in the Kingdom and how the UK can support. But the collaboration is not just in trade but also investment. Saudi Arabia is a significant investor in the UK through the PIF-Softbank Vision Fund, which has invested circa $10 billion into the UK, mostly into Tech and more than $1.8 billion into UK Fintech.”
We had an opportunity to further speak with Salim Kawadri, who is the Head of Investment at the Department for International Trade‘s office in Saudi Arabia, which is based at the British Embassy in Riyadh.
Can you tell me a bit about your role and what the Department for International Trade does in KSA?
I am the UK Department for International Trade’s (DIT) Head of Investment in Saudi Arabia. DIT is the UK Government Department responsible for trade and investment, helping businesses export, driving inward and outward investment, negotiating market access and trade deals, and championing free trade.
I am based in the British Embassy in Riyadh and am responsible for facilitating investment between the two Kingdoms. My colleagues and I work closely with both investment business ecosystems to facilitate and match-make investments. In terms of inward investment, we help Saudi investors – institutional and corporate – to identify UK investment opportunities. We have a team of experts in the UK who source and vet these opportunities. Similarly for outward investment, we help UK funds identify investment opportunities and partnerships in Saudi Arabia. We cover a wide range of asset classes from real estate and infrastructure to venture capital (VC) and beyond. The team and I are also responsible for driving UK financial and professional services (FPS) exports into Saudi Arabia and in this space, we liaise with policy colleagues to try to unlock commercial opportunities.
Despite the challenges of Co-VID 19 the recent UK Saudi Fintech Week was hosted virtually last month. What were some of the key takeaways learned from that?
Ideally we would have liked to have organised a physical mission, but owing to COVID-19, we went entirely virtual. Naturally, you lose the personal touch when you go virtual but at the same time, you can really increase your outreach.
Our aim was to bring together the two ecosystems – fintechs, investors, businesses and governments/policy makers – to explore and advance policy and commercial agendas. Saudi Arabia has made big strides to put itself on the global business map in recent years with the launch of Vision 2030 and the Future Investment Initiative, but from my experience, some segments of the UK FPS sector don’t fully grasp the scale of opportunity here. This is understandable because the international landscape is vast and competitive. But as the biggest economy in the region with an ambitious economic vision in motion, Saudi should not be overlooked. This is essentially the knowledge gap that we wanted to address. So the programme was designed to increase awareness of emerging opportunities in the Saudi market, build relationships between Saudi investors/partners and UK Fintechs and support the development of the Saudi Fintech ecosystem and regulatory environment.
During the week, we arranged five virtual sessions. These included an introduction to Vision 2030 and the financial services sector development plans by the Saudi government; a roundtable with key Saudi businesses to outline opportunities and challenges in Saudi Fintech; a policy and regulatory dialogue on Fintech, connecting leading UK and Saudi policy makers to share best practice; and trade and investment panel sessions with UK fintechs and VCs.
Throughout the week, we heard about the potential of fintech innovation as a means to drive financial sector development and private sector growth, key aims of Vision 2030. Saudi Arabia is becoming an increasingly open and attractive hub for international fintechs and investors. Saudi is eager to digitalise its financial infrastructure and attract leading players who can add value and support its financial sector development targets. We heard from various Saudi businesses about the abundance of opportunities in the Kingdom. For instance Neom, which is the largest of the Saudi giga projects, told us they will be looking for investment and partnership opportunities to help them build a completely modern smart city. We also heard from UK VCs and fintechs about how they can support Saudi’s journey. For instance, the UK has become one of the leading hubs for Islamic Fintech which has a lot to offer Saudi Arabia, one of the largest Islamic Finance markets in the world.
What are some examples of the increase in trade and investment of financial services and specifically fintech between the UK and Saudi Arabia (and wider GCC)?
Saudi Arabia has invested big into UK Fintech. Last year alone, the VisionFund was responsible for more than 25% of total UK Fintech investments and the Saudi Sovereign Wealth Fund, the Public Investment Fund (PIF), with 45%, are the largest investor into the fund. These investments included a record $1.45bn into Greensill (a supply chain finance platform) and $440m into Oaknorth (a digital bank). In the case of Greensill (who participated in UK-Saudi Fintech Week), they have subsequently signed a partnership deal with the PIF and have big plans for the Kingdom.
In the VC space, we are seeing and supporting increased activity in both directions. Hambro Perks are soon to become the first UK VC to set up an office in Saudi Arabia and are raising a fund to invest in regional tech talent. Other VCs such as Anthemis are actively raising capital for their UK fund. Both spoke on a panel during the virtual week to discuss opportunities and synergies with Saudi Arabia and the wider region.
-Where do you see fintech’s role in the future of the continued growth and economic development diversification of Saudi Arabia (particularly with Saudi Vision 2030)? Also how can the UK continue to support both in know-how and wider investments in the region?
Fintech will play an important role in the development and growth of the Kingdom as indeed it has done in many other countries. Saudi Arabia values UK financial sector links and expertise and takes a keen interest in Fintech innovation as part of the wider Vision 2030 ambitions. Comments from both businesses and Saudi government during our week underlined the willingness to build a supportive ecosystem and attractive regulatory environment. As a global leader in Fintech, the UK can and will play a key role in supporting Saudi ambitions: commercial, regulatory and otherwise. The inaugural UK-Saudi Fintech Week was just the start.
Salim Kawadri’s extensive biography:
Salim Kawadri is currently the UK Government Department for International Trade’s (DIT) Head of Investment in Saudi Arabia. Based in the British Embassy in Riyadh, Salim leads a team responsible for facilitating investment between UK and Saudi Arabia across strategic sectors to both Kingdoms. Salim initially joined the UK Government’s Investment arm in 2015 as the Chief Commercial officer of the Financial Services Organisation during which time he had Global responsibility for attracting and delivering investment into the UK Financial and Professional Services Sector. Prior to joining Government, Salim worked as a Senior Consultant covering Risk and Compliance in the Gulf Region for a Dubai based boutique Executive Search firm. He also spent several years working for Credit Suisse in London within the Rates and Derivatives Middle Office.
Simon Penney’s extensive biography:
Simon Penney was appointed as Her Majesty’s Trade Commissioner for the Middle East in May 2018. After an induction period in London, Simon relocated to the region and has been based in UAE since October 2018.
Simon oversees trade promotion and investment using his deep links with industry in the Middle East to raise the profile of the region in the UK, building stronger and deeper trading relationships. Simon leads the UK’s export, FDI, policy and export credit operations in the region.
Before the appointment, Simon spent many years in the banking sector with extensive experience leading Corporate and Financial Institution Groups and teams across, the Middle East, Europe, Africa and Asia.
Simon has held roles in the Middle East with First Gulf Bank and Royal Bank of Scotland, prior to which he was with ABN AMRO Bank in South Africa and the UK. He has also worked in consulting at PwC and in project finance.
Simon has an Engineering degree from Reading University and a MBA from Nottingham University.