KKR wins Saudi Arabia approval

The alternatives assets giant is trailblazing a path for private equity after gaining approval to fundraise in the Middle Eastern kingdom.

Kohlberg Kravis Roberts has joined a small handful of private equity firms to win approval to conduct operations in Saudi Arabia.

The Capital Market Authority (CMA), the kingdom’s market regulator, approved KKR as an “authorised person” this week, according to the agency’s website. Without this designation the firm would need a third party authorised with the CMA to access Saudi investors, explained Benjamin Newland, a corporate partner at Dubai-based law firm King & Spalding.

A number of regional private equity houses have established Saudi-based operations in recent years under broad licenses from the CMA, but KKR is the first global private equity firm to take this step

Benjamin Newland

KKR declined to comment, although in a statement the firm said the licence would enable it “to actively seek investment opportunities in the Kingdom”.

The group's licence is strictly for “arranging” transactions, according to the website. This means they are permitted only to conduct private placements in Saudi Arabia, said Newland.

“A number of regional private equity houses have established Saudi-based operations in recent years under broad licences from the CMA, but KKR is the first global private equity firm to take this step,” he added.

No other major private equity firm outside the MENA region is listed as an authorised person on CMA's website. 

Gaining a licence to do business in Saudi Arabia, typically a year-long process, involves a review of a firm’s investment strategy, credentials and senior personnel, said Newland.

KKR appointed Ford Fraker, the former US Ambassador to Saudi Arabia, as a senior advisor for the firm’s Middle East operations in 2009. That same year the firm established a Dubai office.

“Compliance in Saudi Arabia can be tricky. A number of laws governing capital markets have only recently been introduced making it vital to talk with people on the ground or the regulators themselves before embarking on new projects,” said Newland.

The neighbouring United Arab Emirates is currently developing its own regulatory framework for the private funds industry.