Bridging South Korea and MENA - Efforts and Developments

Saudi Crown Prince Mohammed bin Salman’s visit to Korea

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A few weeks ago, the Saudi Crown Prince and Prime Minister HRH Prince Mohammed bin Salman visited South Korea and met with the Korean President Yoon as well as many business leaders, including chiefs of Korean conglomerates such as Samsung Electronics Chairman Lee Jae-yong, Hyundai Motor Group Chairman Chung Eui-sun and SK Group Chairman Chey Tae-won. Press reported that the purpose of the visit was to review relations between the two countries, boost bilateral cooperation, particularly on the areas of infrastructure construction, energy, and defense industries, and invite partners for the Kingdom’s Neom City Project, while President Yoon expressed hopes for Korea to be a part of Saudi Arabia’s growth journey and for Korean companies to participate in the upcoming Saudi megaprojects.

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The long-standing history of friendship between the two nations spans over six decades through many infrastructure and construction projects in Saudi Arabia that Korea partook in, and Saudi Arabia is not only Korea's largest trading partner in the Middle East today, but also a core partner in Korea’s economic and energy security, as highlighted by President Yoon.

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Economic partnership was further elevated when Saudi-Korea Vision 2030 Committee was formed in 2017 to achieve bilateral cooperation in creating a sustainable strategy together after the Saudi Vision 2030 was announced in 2016. Now that the reform momentum and the implementation of various initiatives under the Saudi Vision have taken on a rapid course, the Korean government and companies are eagerly pursuing to engage with the immense opportunities and economic benefits that the Kingdom has to offer.

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On the occasion of the Crown Prince’s visit, 26 investment agreements and memorandums of understanding were signed by major firms of Korea and the government and businesses of Saudi Arabia at the ‘2022 Korea-Saudi Arabia Investment Forum’ held in Seoul. Approximately 300 leading figures of the Council of Saudi Chambers and the Korean Chambers of Commerce and Industry attended the forum, including Saudi Minister of Investment HE Khalid Al-Falih and the Korean Minister of Trade, Industry and Energy Lee Chang-Yang. Though the exact size of agreements has not been disclosed, deals are estimated to amount to a combined value of ~$30 billion, according to various press reports.

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Business agreements covered a variety of sectors ranging from manufacturing, construction, petrochemicals and pharmaceuticals to clean energy resources, smart farms, education, culture and services, as well as gaming and technology investments.

SVC to collaborate with Korea Venture Investment Corporation

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Saudi Venture Capital Company (SVC) and Korea Venture Investment Corporation (KVIC), a government-backed Fund of Funds in each country, signed a MOU to support SMEs and startups in both countries. This is the second MOU signed between the two agencies, after the previous agreement terminated as of Jan 2022. While KVIC, founded in 2005, manages more than $5.7 billion and has invested in over 1000 funds & 8,974 portfolio companies as of Q3 22, Shorooq Partners is the only global fund in the Middle East that has received a commitment from KVIC’s foreign investment program in 2021. Shorooq Partners has been serving as the bridge between the two regions ever since.  

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Through this new agreement between SVC and KVIC, the two countries will undertake two concrete actions for cooperation: 1) create a joint fund or implement another type of collaboration model to support global expansion of startups from both countries, as well as expand cooperation and share networks between the two venture capitals; 2) cooperate to support SMEs and startups in Esports and gaming industries.

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Spearheaded by economic diversification efforts to prepare for the post-oil era, Saudi Arabia is bidding to become the world’s biggest gaming hub by 2030 and has announced a massive $37.8 billion investment plan into the gaming and Esports sector. Given Korea’s prominent position in the global gaming market, it is no surprise that Saudi Arabia hopes for active exchanges and cooperation with Korean startups, venture capitals and large corporations in related fields to help revitalize the gaming and entertainment industry in the region. Korea also expects this MOU to provide an opportunity for the Kingdom to serve as a gateway for KVIC to launch the next global fund in the Middle East and help Korean startups to expand and attract foreign investment from the region.

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As the Korean Minister of SMEs and Startups said, “Korean startups with innovative ideas and outstanding technologies will be great partners for promoting the economic growth of Saudi Arabia. Korea will treat this MOU as an important opportunity to explore cooperation projects that can support the growth of startup ecosystems in the two countries.”

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“Given Korea’s prominent position in the global gaming market, it is no surprise that Saudi Arabia hopes for active exchanges and cooperation with Korean startups, venture capitals and large corporations in related fields to help revitalize the gaming and entertainment industry in the region.”

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Bilateral relations on a new level

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For those interested, among the many business agreements and MOUs signed at the Saudi-Korea Investment Forum was a $7 billion (KRW 9.25 trillion) Phase 2 Engineering, Procurement and Construction contract between 3 Korea construction companies and S-Oil, marking the largest foreign investment in Korea to date by Aramco, the largest shareholder of the oil refiner headquartered in Korea. Known as the Shaheen Project, it will begin from next year construction of a petrochemical factory in Ulsan, a southeast port city in Korea, with a targeted completion in 2026.  Once completed, it will feature one of the world’s largest refinery-integrated petrochemical steam crackers, providing a stable building block for the petrochemical industry in Korea and beyond.

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Another notable MOU was signed between Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia with about $620 billion in assets under management, and a Korean public-private energy consortium led by state-owned utility company Korea Electric Power Corporation (KEPCO) to develop a hydrogen and ammonia plant in Saudi Arabia. According to the Korea Times, the agreement is for a total of $6.5 billion to build a 396,694-square-meter plant near Yanbu, a western port city on Saudi Arabia's Red Sea coast, by 2029, and operate it for 20 years thereafter.

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The Saudi Ministry of Investment and Hyundai Rotem, a railway vehicle, defense products and plant equipment manufacturing affiliate of Hyundai Motor Group, also signed a MOU to build a train line in the city of Neom. The Saudi Ministry signed five additional MOUs with other Korean companies – Lotte Fine Chemical (Lotte Group's chemical material manufacturing affiliate), DL Chemical (petrochemical firm), GL Rapha (bio-pharmaceutical company, SHIFT UP (game designer and developer), and YD&S (smart solutions company).

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In the past, the scope of collaborations between the two countries was somewhat limited to construction and energy sectors, but the list of new agreements that resulted at the end of the Saudi-Korea Forum is comprehensive on multiple fronts, as detailed in the table below. These agreements are as important for Korea as for Saudi to take one step further towards building the Crown Prince Mohammed’s future away from the present.

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Granted, most of the MOUs and agreements signed with South Korea are non-binding as of today, but both countries are determined to achieve the goals of Vision 2030, with Korea focused on securing more concrete contracts in the upcoming months. Korea’s global positioning as the 10th largest economy driven by the private sector has been a testament to its success, and Saudi Arabia is the fastest growing nation of opportunities. Shorooq Partners looks forward to mutually beneficial outcomes from this cooperation between the two countries.

Shorooq Partners as the bridge between Korea and the Middle East

Born and raised in Korea, and having founded Shorooq Partners with Mahmoud Adi in UAE, Shane Shin has embraced the challenge of bringing the East and the Middle East closer through his role as an investor in startups in both regions, connecting startups with investors in the East and vice versa.

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In just over six years since the inception of Shorooq Partners and its development as the leading investment firm across MENAP, Shorooq Partners has served a significant role bridging the gap between Saudi Arabia and Korea by bringing investments across both countries, helping companies and talents expand to each other.  

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A few months ago, Shorooq Partners facilitated a trip for Saudi delegation to visit key stakeholders in Korea, including but not limited to sovereign wealth funds, unicorns, startups and asset managers.  More recently, we have led another Saudi delegation trip to Korea and met with the country’s leading gaming companies, including Kakao Games, Krafton, and Com2uS.  Gaming is one of the sectors in which Shorooq Partners has emerged as an industry leader in the Middle East.  And today, Shorooq is actively exploring Korean gaming companies and startups to help expand their exposure to the MENAP region, while elevating the regional gaming space altogether.

Shorooq Partners operates under a mandate to invest in early-stage startups across the Middle East, North Africa, and Pakistan region, as well as introducing the region to global markets and players. The Saudi Vision 2030 has unleashed huge potential for the country to the outside world, and we share the Kingdom’s vision of empowering startups and fueling their growths and contribution to the economic development in the country and beyond. As the only middle eastern fund to have received funding from Korea’s government-backed fund, Shorooq Partners is honored to be a part of the program that will be strategically beneficial to the Korean venture ecosystem, while bringing foreign capital into the Middle East.

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Just last month, the Annual General Meeting of Shorooq Partners was held in Riyadh, Saudi Arabia to celebrate the closing of 2022. We have been strengthening our position in the Kingdom because we are convinced in the country’s growth potential and in our ability to guide Saudi startups onto the next stage of developments. Just as Saudi Arabia is re-building itself and is on a race to become the next big financial and tech hub, Shorooq Partners has not been shy of utilizing this opportunity and will not stop in our endeavors as a keen investor in the region, and also as the bridge that connects the region to the rest of the world.

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If you are a founder who shares our vision of pushing for new frontiers, reach out to us today. There is opportunity ahead.

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