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SAUDI ARABIA - Economy

Stuart D’Souza

CEO, Arabian Enterprise Incubators (AEI)

Bio

Stuart D’Souza is CEO of AEI. He has lived in Saudi Arabia for over 15 years and is a regular contributor and commentator on all matters relating to the transformation of the country and has worked as an advisor to the ministries of defense in Saudi Arabia, Qatar, and the UAE.

"Our primary mission is to enable foreign companies to enter, establish and expand in the Saudi market."
Can you please provide an overview of Arabian Enterprise Incubators (AEI) and its primary mission in the market?

AEI is a consulting and support services company, headquartered in Riyadh supporting our clients all over the Kingdom. Our primary mission is to enable foreign companies to enter, establish and expand in the Saudi market.

The Saudi Arabian market is known for its unique challenges and opportunities. How does AEI support businesses in navigating the local business landscape?

Above all we help our clients by being an honest, informed and experienced partner. Whether that support takes the form of strategy and planning advice, or setting up an entity, or providing back office services, or payroll, or office space, or accommodation, or transport – whatever the client needs we can offer as part of our end-to-end service offering.

AEI has been in operation for a significant period. How has the entrepreneurial landscape in Saudi Arabia evolved during this time, and how has AEI adapted its approach to support its clients?

The business landscape has of course been transformed by Vision 2030 – both in terms of the regulatory environment and also the opportunities for businesses. We have adapted our service offerings to meet the evolving demands of our clients. For us, the biggest change is that our clients are committed to Saudi rather than commuting from the UAE or elsewhere. They are setting up companies and investing time and money into their Saudi footprint. Before, the Saudi market was often treated on an arm’s length basis by foreign companies – occasional visits maybe, but the approach was to appoint a partner / distributor / agent and see what happens. We’ve always fought against that model, we’ve always flown the flag for Saudi and now, finally, the whole world agrees with us and wants to come to the Kingdom. This change has seen demand for all parts of our business grow but particularly in Corporate Services – we’ve seen a 500% increase in demand for entity registration services from 2019 to 2022, even with the pandemic.

Could you share some success stories of companies that have successfully entered the Saudi Arabian market with AEI’s assistance?

There are case studies and examples on our website. The thing to remember is that you must seek informed, local advice from experienced professionals. The Saudi market is not the same as the UAE or other jurisdictions in the Gulf. The regulatory environment is constantly evolving and it can be a challenge to keep up with reforms being based in Riyadh let alone trying to stay up to date from an office in New York or London or Dubai or wherever. In 2022, our Corporate Services team did see an increase in clients coming to us who had been given poor advice or who had not been given the full picture and so clients were unaware or unprepared. Trying to fix a problem is always a challenge, hence why we constantly reinforce the need for good advice. We set-up fifty five 100% foreign owned businesses in 2022 and they were drawn from almost every sector—manufacturing, consulting, training, entertainment, aerospace, real estate and fintech. It just goes to show that every sector of the Saudi economy is attracting foreign interest and investment.

From last year’s interview: “(…) Our goals in 2022 are growth. We hit a major milestone of USD25 million in 2021. We want to see growth in terms of clients, sales and margins”. How would you assess the performance of the company in 2022 and what factors are underpinning its growth?

Overall 2022 was a solid year for AEI. We had a number of long term contracts come to an end as our clients completed their projects. We knew this would happen of course and we had planned accordingly. We were able to grow sales and exceeded $25m again which is excellent. In Q3 2022 we acquired ARC Compound, a large residential complex in the west of Riyadh. We launched a renovation project, investing significantly to improve the standard of accommodation and communal facilities. ARC will be a central part of AEI’s Riyadh offering to clients and provide a good contribution to sales going forward. Phase 1 of the renovation (75 apartments) were fully leased within 6 weeks of opening which was particularly pleasing!
Well obviously ARC is going to be contributing a lot to our Support Services business unit in 2023 and beyond. As was the case in 2022 though, it is our Corporate Services offering that continues to see year on year growth. The team has a solid foundation following our transformation and investment efforts in 2021 and 2022. In terms of new service offerings, we have a pretty comprehensive portfolio currently. We have added a few extra finance administration activities to our Back Office service line but other than that we are happy with our market offerings.

How do you envision AEI’s role evolving in the coming years and what strategic initiatives are you implementing to achieve your goals? What do you see as the next exciting chapter for the organization?

That is a big question and rolls into our plans for 2024 and beyond. We hope to have ARC fully operational by the end of 2023 and to meet our occupancy targets in Q1 2024 – this is a crucial target as it will underpin sales in 2024 for the Support Services business unit. We are expanding our footprint in Malaz (central east Riyadh) to offer more office space in The Incubator to meet client demand and in 2024 we plan to find a location for a second incubator in the west of Riyadh, near to ARC. The expansion of our already significant footprint in Riyadh is closely aligned to the Vision 2030 objective of making Riyadh the commercial hub for the Kingdom and eventually the region. With ARC, two incubators and our head office all in Riyadh we are perfectly placed to support our clients in the capital for many years to come. 2024 though will see us go beyond Riyadh. We are of course already supporting projects in Jeddah, Taif, Al Ula, Al Kharj, Dharan and Khobar but we will be looking to establish a permanent footprint in Neom. We can only do this at the behest of Neom and a key priority for our business development team is to figure out the art of the possible up there. Clearly there are opportunities and we have many clients who need our support so it is something of a ‘no-brainer’ for us to at least try. If the conditions are right and fit our risk profile, then I’m prepared to invest the time and money needed to establish a full AEI capability in Neom. We will also head eastwards in terms of our business development activities. We have very strong ties into the UK, US and UAE which continue to represent our main markets. In 2023 we have seen a number of clients coming to the Kingdom from Singapore and a few from China. In H1 2024, our business development team will be putting together a road show of events across the far east, taking in Singapore, Hong Kong, Shanghai and probably Seoul as well. There will continue to be demand for our services from our traditional markets but we will proactively reach out to the east and hopefully tap into a vein of export ready clients seeking to enter, establish or expand in the Saudi market.

 

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