As Saudi Arabia advances its Vision 2030 ambitions, the Kingdom’s capital markets are undergoing a remarkable transformation. With reforms designed to deepen financial markets, increase private sector participation, and attract foreign capital, opportunities for global fund managers have never been more compelling. Yet, alongside the promise lies a complex regulatory environment that requires strategic navigation.

For asset managers, private equity firms, and alternative investment specialists eyeing the region, fund hosting offers an increasingly relevant route into the Saudi market—one that balances compliance with cost-efficiency, and strategic entry with structural flexibility.

Understanding the Saudi Opportunity

Saudi Arabia is now one of the most active markets for institutional capital in the Middle East. In 2023, the Kingdom attracted over SAR 84 billion in foreign investment across sectors, with the Capital Market Authority (CMA) reporting steady growth in the number of authorised funds and registered asset managers.

The growth of alternative assets, particularly private equity, private credit, and real estate investment strategies, is especially notable. Saudi Arabia’s asset management industry grew by 20% year-on-year in 2024, pushing the sector’s total assets to SAR 1 trillion (USD 266 billion), according to Fitch Ratings. The industry is expected to continue attracting steady inflows through 2025 and 2026, with assets under management projected to exceed SAR 1.3 trillion (USD 346 billion).

Private equity activity in MENA totalled USD 27.6 billion between 2020 and 2024, growing at a compound annual growth rate (CAGR) of 14%, with Saudi Arabia accounting for 31% of all PE transactions in the region, second only to the UAE.

“The appetite from Saudi investors is increasingly sophisticated,” notes a senior fund structuring advisor at j. awan & partners. “Institutional LPs are looking beyond plain vanilla offerings. They are demanding access to global private markets, with strong governance and transparency.”

Regulatory Landscape for Foreign Funds

While investor appetite is high, the regulatory framework governing fund activity in the Kingdom is detailed and highly structured. The Capital Market Authority oversees fund authorisations and supervises both public and private offerings. Foreign managers must comply with several rules, including:

• The Capital Market Institutions Regulations, which define the legal framework for investment management firms, asset managers, and securities businesses operating in Saudi Arabia.

• The Investment Funds Regulations (IFRs), which govern the registration, offering, and operation of public and private investment funds.

• The Rules on the Offer of Securities and Continuing Obligations, which apply to private placements of fund units.

• The Authorised Persons Regulations, which set out requirements for fund managers and hosting platforms to become CMA-licensed entities.

Direct fund licensing typically requires a local presence, which may involve forming a Saudi-incorporated entity, appointing resident directors, maintaining a physical office, and submitting to full CMA supervision—a process that can be both time-consuming and capital-intensive for non-local managers.

How Fund Hosting Simplifies Market Entry

Fund hosting platforms offer a practical alternative. Under this model, foreign managers operate through a locally licensed firm that holds the relevant CMA authorisations to structure, manage, and administer funds.

This approach enables sponsors to:

• Launch and operate funds without the need for immediate local incorporation

• Leverage the host’s regulatory infrastructure, reporting systems, and compliance governance

• Enter the market faster and more cost-effectively while retaining focus on investment strategy

For strategies such as private credit and direct lending, this route may also accommodate vehicles structured under the Direct Financing Investment Fund Instructions - a dedicated framework for non-bank lending structures.

Use Cases – Who Should Consider Hosting?

Hosting is particularly suited to:

• Private equity or credit funds entering the region for the first time

• Global asset managers testing the market before full licensing

• Foreign general partners targeting Saudi institutional LPs

• VC managers tapping into sovereign-backed innovation initiatives

In some cases, managers may also consider establishing a Special Purpose Vehicle (SPV) as part of the hosted structure, utilising CMA’s 2021 Rules for Special Purpose Entities for structured finance and fund vehicles.

Strategic Considerations for Success

While hosting simplifies regulatory entry, long-term success requires attention to investor relationships, transparency, and operational alignment.

CMA places strong emphasis on:

• Regular disclosures and reporting as outlined in the IFRs

• Clear governance arrangements, including board oversight and fiduciary controls

• Consistent unitholder communication and transparency during the fund lifecycle

Firms that succeed in Saudi Arabia tend to invest early in localisation, market education, and building credibility with institutional investors—often in collaboration with their host platform.

As Saudi Arabia opens its financial markets to the world, fund hosting has emerged as a strategic enabler of market access. It allows managers to build a compliant, cost-efficient presence without the full commitment of direct licensing—while laying the groundwork for future expansion.

At j. awan & partners, and through our growing presence via j. awan capital in Riyadh, we support fund managers with advisory, structuring, and regulatory solutions tailored to Saudi Arabia’s capital markets.

Looking to enter Saudi Arabia’s capital markets?

Contact our fund structuring team today to learn how hosting can accelerate your entry and unlock growth.