subsidiaries

Al Rajhi Capital (ARC) – the fully-owned investment banking subsidiary of alrajhi bank, and market leader in bespoke brokerage and investment solutions, maintained its leadership position as one of the top traders by value with 16.3% in overall market share, ranked second in the market. ARC also reached second position in the Kingdom in terms of Assets under Management (AuM), with a remarkable 62% YoY growth in total AuM. New onboardings more than doubled (130% growth), with the subsidiary recording a 43% YoY increase in active clients during the reporting period. In terms of international trading, ARC expanded its global outreach to cover 38 markets worldwide. ARC also became the first equities market maker in the Saudi Main Market during the preceding financial year, operating in line with market maker obligations of the Saudi Exchange.

The year 2024 started on a solid note with average daily traded value touching two-year highs in Q1 2024. The optimism on the back of US Fed rate cut expectations, resilient oil prices in H1 2024, and the strong performance of IPOs in H1 2024 supported the investor sentiment. However, the liquidity squeeze caused by multiple IPOs & large scale secondary offerings at the end of Q2 2024 weighed on the overall market performance during the end of Q2 2024. Furthermore, the geopolitical concerns coinciding with weaker oil prices also impacted sentiments. Thus, H2 2024 saw a decline in trading activity. Overall however, the year was encouraging in terms of trading volumes, with average daily traded value up almost 39% YoY.

A notable achievement in 2024 was the launch of ARC’s first international private fund – the ‘Alrajhi International Corporate Credit Fund’. ARC’s International Investments Department – which was established in 2022 – continued to expand its portfolio during the year in review, across both public and private investment strategies.

Expanding the asset management portfolio

As one of the top Asset Managers in the Kingdom, ARC offers a wide range of innovative investment products across all major asset classes, with varying investment objectives and risk appetite. The Division manages regional and local mutual funds, in addition to customised discretionary portfolios for institutional and high net worth clients. Key asset classes under management include Equity Funds (Local, GCC, MENA and International), Commodity Murabaha Funds, and various Multi Asset Funds.

The Asset Management Division’s Fund Factory has launched a total of 3 new public funds in 2024:

• Al Rajhi Large Cap Fund
• Al Rajhi Petrochemical Fund
• Al Rajhi Awaed Fund

Subscriptions were covered for both the Large Cap Fund and Petrochemical Fund before the end of its offering period, contributing to ARC’s rise in the ranks to reach #2 in AuM in the Saudi Market. The Awaed Fund was launched with the aim to achieve growth in both capital and liquidity with low risks.

ARC funds continued to perform well during 2024, with the Al Rajhi Mid/Small-Cap Fund closing the year in the lead with a 35.0% YoY increase. Three more ARC Funds (Al Rajhi Freestyle Saudi Equity Fund, Al Rajhi Inclusion Fund and Al Rajhi Momentum Fund) rounded up the top five performing equity funds as listed in the market (for equity funds above SAR 100 Mn.).

Table 01 Top Performing ARC Equity Mutual Funds in 2024 (for equity funds above SAR 100 Mn.)

On the real estate front, ARC launched 5 private funds during the year in review, with the value of the real estate AuM recording a 48% YoY growth. Furthermore, for custody and agency services the value of total Assets under Custody (AuC) of ARC surpassed SAR 1 Bn. in 2024. The subsidiary has been accredited as an independent custody member in the Saudi Market.

During the reporting period, ARC managed government debt instrument issuances worth more than SAR 721 Bn. The Securities Services Team of ARC was managing the issuance of 105 government and institutional sukuk programmes at the close of 2024, and had successfully executed 219 Murabaha transactions. ARC has been accredited as a primary dealer for submitting bids to purchase sukuk issued by the KSA government through Bloomberg platform.

2024 also saw ARC participating in 49 IPOs in both main and parallel markets (Nomu), while automating operational processes for main and Nomu IPO activities to enable greater efficiencies for clients. ARC also launched agency services for dividends distribution in the Nomu market during the year in review.

Facilitating socially conscious savings and investments

With evolving international investment policy frameworks and a niche demographic of socially conscious investors, ARC continued to introduce such sought-after investment options for its clients during the year in review. Having launched seven Endowment (Awqaf) Funds in 2023 as sustainable financial products, ARC launch four more Endowment Funds in 2024, cementing the subsidiary’s role in contributing towards social cohesion by promoting investments in non-profits.

Endowment funds launched in 2024:

• Takaful Endowment Fund
• Trahum Endowment Fund
• Al Suqia Associations Endowment Fund
• Al Rajhi Endowment fund (Unified)

ARC also introduced the Thrift Plan product during the reporting period, a unique savings plan offered to employees by their employers, to direct part of their income towards an investment program, with the possible participation of the employer to match a percentage of the employee’s contributions. While employees benefit from a savings and investment plan, they are also afforded the possibility of compound savings from their employers to multiply their investments over time, with the savings doubling as a retirement fund for employees. For employers, beyond ensuring the long-term financial security of their teams, Thrift Plans have the potential to increase employee retention rates, and enhance their loyalty. ARC offers tailored plans for corporations based on their scale and headcounts.

ARC’s Investment Banking Division offers a complete range of strategic financial advisory services, including debt and equity structuring, in addition to mergers and acquisitions, to assist clients in achieving their business and financial goals. The Investment Banking Division marked an exceptional year by closing a multitude of deals in the local and international financial markets, largely driven by the synergies strengthened and optimised across alrajhi group.

This exceptional performance during the reporting period saw ARC’s Investment Banking Division being ranked second in terms of Sukuk issuance in the Kingdom, and SAR Sukuk issuances, and third in terms of Sukuk issued globally in 2024 (sources: Bloomberg Debt Capital Market League Tables – Local Issuances/Global Issuances)

The digital evolution of advisory and brokerage services

In 2023, ARC introduced its all-in-one industry-redefining ‘Super App’, providing mobile access to all ARC services and products. Users were able to access brokerage services to trade in the Saudi Tadawul Market, and also explore the international brokerage feature that allows users to access a diverse range of global investment opportunities.

In 2024, the ARC Super App underwent several upgrades and enhancements, key among which was the introduction of ‘alrajhi Mashora’ – the robo advisory platform within the App. ARC enabled automated investing by integrating alrajhi Mashora to the ARC Super App during the year in review. Customers registered on the ARC Super App are now able to build their own personalised, Shariah-compliant portfolios based on individual financial goals as well as risk tolerance, and timelines. alrajhi Mashora leverages emerging technologies to provide automated, algorithm-driven, daily rebalancing portfolio management services.

Continuous improvement on the functionality and features of the Super App were carried out by ARC, looping in customer feedback to further enrich the customer experience, while also achieving the desired benchmark in line with ARC’s digital transformation agenda. One of the most notable upgrades was enabling customers to participate in IPO subscriptions directly through the App.

Additionally, the reporting period introduced end-to-end digital journeys for several more products, in addition to a new ‘international markets’ trading interface, as well as Voice Commands, allowing the users to execute their transactions using the voice inputs. The Super App also launched the systematic investment plan (SIP) – a tool that allows registered users to make recurring investments over a period of time. The App also launched end-to-end Murabaha journey as further enhancements in 2024.

As a result of enabling online trade and enriching the digital experience, over SAR 7 Bn. in subscriptions in mutual funds were made collectively via both the ARC Super App and the alrajhi mobile app, following the introduction of the new feature during the reporting period. Clients onboarding digitally in 2024 doubled in growth from last year. Overall, the ARC Super App recorded 2+ million downloads in total at the close of the year in review, with an impressive 4.6/5 App Store rating.

Leveraging group synergies

ARC launched its own 2024-2026 Business Strategy cycle, coinciding with the launch of alrajhi’s new ‘harmonize the group’ strategy cycle for 2024-2026. This has enabled the subsidiary to collaborate with alrajhi bank in order to better leverage group synergies, and provide highly tailored investment solutions for alrajhi bank customers under the Business-to-Consumer (B2C) and Business-to-Business (B2B) offerings. Investment options have also been integrated into the alrajhi bank app.

Furthermore, the subsidiary also launched a Human Capital Transformation Program in 2024. This initiative was designed to support ARC’s growth by attracting top talent, and will focus on the capacity development of both technical and soft capabilities, thereby enhancing the overall corporate culture and engagement across the subsidiary.