PIF backs USD 2 bn Middle East-focused PE fund

Aramco’s carbon storage project coming online soon, PIF targets new funds, and Saudi eyes AI leadership on day two of FII: The second and penultimate day of the Future Investment Initiative (FII) forum in Riyadh saw Aramco and the Public Investment Fund (PIF) inking agreements left and right, while Saudi set out ambitious AI plans and we got updates on a new monorail for KAFD. Plus so. Much. More.

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ARAMCO FIRING ON ALL CYLINDERS-

#1- Aramco inked a collaboration framework agreement with Vietnam Oil and Gas Group (Petrovietnam) to explore energy storage, supply, and trade in Vietnam, according to a press release. No further details were shared on the agreement. Though Aramco has supplied crude oil to Vietnam, this marks its first potential investment in the country, Reuters reports.

#2- SIDF and Taulia join Aramco to provide affordable financing to its supply chain: Aramco, the Saudi Industrial Development Fund (SIDF) and working capital management firm Taulia partnered to establish a supply chain financing program, according to a press release. The initiative aims to provide affordable financing to Aramco’s suppliers to improve liquidity, liquidity forecasting, and supply chain resilience. It is expected to unlock SAR bns in liquidity, optimize working capital, and enhance business relationships across Aramco’s supply chain.

#3- Aramco’s planned 9 mn carbon storage project in Jubail will begin production by 2027 or 2028, putting it on track to be the world’s largest project of its kind, Aramco CEO Amin Nasser said at the forum. The accelerated carbon capture and sequestration project, which Aramco signed the agreement for back in November 2022, will see around 6 mn tons of CO2 coming from Aramco, while the rest will come from industrial sources. Scotland-based consulting and engineering firm Wood finalized the front-end engineering and design (FEED) scope for the first phase in June .

PRIVATE EQUITY-

PIF inked a non-binding MoU with Brookfield Asset Management to back Brookfield’s planned USD 2 bn Middle East-focused private equity fund, according to a press release. Under the agreement, PIF will serve as the anchor investor for Brookfield Middle East Partners (BMEP), which will direct at least 50% of its capital for investments in Saudi Arabia across the local industrials, technology, and healthcare sectors. The Saudi-focused investments will also be earmarked for “leading international companies looking to expand in the local market,” which will help drive foreign direct investment into the Kingdom, the press release said.

Brookfield also plans to expand its Riyadh office and establish the Brookfield Academy locally to support talent development. The MoU is contingent upon obtaining regulatory approvals and meeting specified conditions.The agreement also got ink in Reuters and Bloomberg.

ARTIFICIAL INTELLIGENCE-

#1- PIF + Google Cloud partnered to create a global AI hub near Dammam, aimed at upskilling the local workforce through AI programs, according to a press release. Using Google Cloud’s technology, the hub will focus on improving AI applications and data services, particularly Arabic language models, potentially adding USD 71 bn to Saudi’s GDP over eight years.

#2- Saudi Arabia is looking to bank on AI’s mega electricity requirements by offering the world’s lowest energy costs for data centers, at 4.8 cents per kWh using gas and 6.8 cents for renewables, Bloomberg reports. Blackstone CEO Stephen Schwarzman warned that electricity usage could rise by 40% in the next decade due to the AI boom, potentially hindering technological progress and straining the global grid. Google CEO Eric Schmidt noted that Saudi Arabia could leverage its abundant resources to become a key player in the energy-intensive AI sector.

#3- A global pledge for inclusive AI: The FII also saw the launch of the AI Inclusive Initiative, uniting global tech companies, knowledge partners, policymakers, and the private sector to fund AI projects in emerging markets, according to a press release. The FII Institute's 19 Knowledge Partners will offer expertise and capacity-building support to drive the initiative forward.

OTHER PROJECT NEWS FROM FII-

#1- KAFD is getting a new monorail: The King Abdullah Financial District Development and Management Company (KAFD DMC) inked an agreement with Hassan Allam Construction Saudi, CRRC Hong Kong, and CRRC Nanjing Puzhen to launch a 3.6 km driverless monorail system, according to a press release (pdf) from our friends at Hassan Allam. The monorail will feature six trains and stations, integrated with the Riyadh Metro, and an expected capacity of 3.5k passengers per hour.

#2- Diriyah is on track: USD 15 bn out of the USD 64 bn allocated to the Diriyah project has been spent, with the first hotel set to open by late 2024, followed by 41 more hotels and nine museums, CEO Jerry Inzerillo said, according to Aleqtisadiah and Reuters.

#2- Manara Minerals expects to finalize its acquisition of a minority stake in First Quantum Minerals’ Zambian copper and nickel assets by the end of the year, Ma’aden CEO and Manara Minerals Vice Chairman Robert Wilt told Reuters. The Ma’aden and PIF JV was reported to be in advanced talks for a USD 1.5-2 bn acquisition of a 15-20% minority stake in the mines in Zambia earlier this month.

COMMENTARY + OTHER UPDATES-

#1- Saudi’s IPO market is “on fire,” fueled by a surge in growth capital and liquidity, including family wealth transitions, Moelis and Co. CEO Ken Moelis said, according to Zawya. “This is what happens when you have an exciting market, high growth, and capital that needs to go in and businesses that want the capital to grow,” he said.

Bucking the global trend: The volume of IPO activity in the Kingdom comes in contrast with the global slowdown in IPOs, JP Morgan CEO of Asset and Wealth Management Mary Callahan Erdoes said. Erdoes pointed to stricter regulations, activist investors, and businesses opting to remain private longer as reasons behind the current global trend.

#2- Saudi citizens are the world’s most satisfied with their lives, landing at an 84% satisfaction score, contrasted with a global dissatisfaction rate of 52%, according to the 2024 FII Priority Compass survey (pdf). On a global scale, 40% cite economic conditions as their main concern, followed by governance (19%), healthcare (17%), and environmental issues (13%).

The Global South is more optimistic about technology’s potential to improve lives (60%) than the Global North (34%). Additionally, 37% view AI as a potential threat, with 39% uncertain about its impact. The survey covers 24 countries, representing 62% of the world's population.

#3- Elon Musk made a surprise virtual appearance at the forum to discuss the rapid pace of developments in AI and how it could match human abilities within a year or two. Bloomberg took note of the story.

PIF-backed Acwa Power inked four agreements worth a combined USD 1.8 bn (SAR 6.7 bn) at the Future Investment Initiative (FII) Forum earlier this week, according to a statement. The newly-signed partnerships include project financing, research and development, renewable energy, and storage solutions across projects in the GCC, Morocco, Uzbekistan, and China.

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#1- Corporate credit agreement with the National Bank of Kuwait (NBK): Acwa signed a USD 690 mn (SAR 2.6 bn) corporate finance agreement with NBK to back upcoming project pipelines in Saudi Arabia, Kuwait, and other markets.

#2- Renewables murabaha financing agreement with the IFC for Uzbekistan projects: Acwa also secured a USD 240 mn (SAR 901 mn) Shariah-compliant equity bridge loan from the World Bank’s International Finance Corporation (IFC) to support two major solar power and storage projects in Uzbekistan, according to an IFC statement. The four-year financing murabaha agreement will include a USD 227.8 mn A-Loan and a USD 12.3 mn trust loan under IFC’s Managed Co-Lending Portfolio Program. The funding will back Acwa’s equity investments in the projects over the coming four years.

Project details: The projects cover the construction and operation of a 1 GW solar PV plant, a 668 MW battery and energy storage system (BESS), and some 500 km of power transmission lines. The developments are expected to deliver 2.4 GW hours of electric power per annum and cut 1.3 mn tons of yearly CO2 emissions.

#3- A new wind farm to power Morocco battery plant: Acwa signed a USD 800 mn (SAR 3 bn) agreement with Gotion Power Morocco to develop a 500 MW wind farm and a 2k MWh battery energy storage system to power a Gotion battery manufacturing plant that is set to begin production in 1H 2026.

#4- Acwa also signed an R&D partnership with China’s Lujiazui Bureau to establish a USD 54 mn (SAR 202 mn) Shanghai research center focused on the development of solar, wind, energy storage, green hydrogen, and desalination technologies.

IN OTHER RENEWABLES NEWS-

Desert Technologies to expand solar manufacturing capacity in Saudi: Renewable energy solutions company Desert Technologies is establishing a USD 200 mn factory in Jeddah to produce solar panels and cells, according to a company statement. The factory will produce equipment with solar capacity of 5 GW per year, marking an increase from the company’s current annual manufacturing capacity of 110 MW, reports Bloomberg.

Desert tech is boosting its capacity: The company said last year that it plans to raise its production capacity to 4 GW yearly and inked an MoU with Elsewedy Electric to boost its exports of renewable energy products to African markets.

PIF-owned Riyadh Air placed a firm order with Airbus for 60 A321neo aircraft, part of the European aircraft maker’s best-selling aircraft family type, according to a statement from Airbus. The agreement was signed on the sidelines of the Future Investment Initiative forum. The story got ink from Reuters and Bloomberg.

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What we know: The order will set Riyadh Air back some USD 4 bn, Reuters said, citing estimates accounting for usual markdowns from aviation consultancy Cirium Ascend. Deliveries are expected to run between 2H 2026 and 2030, Riyadh Air CEO Tony Douglas said. The latest order brings Riyadh Air’s orderbook to 132 aircraft, with the carrier gearing up to kick off operations next year.

Cutting in line: The lead time for the order is unusually short — given Airbus’ significant backlogs — implying that Riyadh Air nabbed early slots previously booked by other airlines that could not make good on payments, industry sources said.

The A320neo order is part of Riyadh Air’s sustainability goals: The new investment “will ensure Riyadh Air operates one of the most fuel efficient fleets,” Douglas said, adding that the purchase will help the Kingdom meet its decarbonization targets. The A321neo aircraft family deploys new engines and specially-designed wingtips that cut fuel consumption and CO2 emission by 20% in comparison to legacy single-aisle aircraft, while also cutting back on noise pollution, according to Airbus.

Yet another hit for Boeing: The latest Airbus order follows speculation that Riyadh Air was close to sealing a 100-plane purchase from Boeing, with the airline cautioning at the time that both Airbus and Boeing were being considered for an upcoming order of narrowbody jets, Reuters noted.

IN OTHER AVIATION NEWS-

Hong Kong carrier Cathay Pacific will run three weekly flights between Riyadh and Hong Kong, connecting King Khalid International Airport with Hong Kong International Airport, King Khalid International Airport said on X.

Asset manager Investcorp Holdings’ China-backed Investcorp Golden Horizon fund is investing in three projects in the Middle East, primarily in Saudi Arabia and the UAE, CIO Rishi Kapoor told Bloomberg (watch, runtime: 2:46). Investments focus on the consumer services, healthcare, and business services sectors, though no further details were disclosed. The asset manager is targeting USD 750 mn for the fund.

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REFRESHER- Investcorp, which is backed by Abu Dhabi sovereign wealth fund Mubadala, launched a USD 1 bn investment fund in April, Investcorp Golden Horizon, to invest in high-growth companies in consumer, healthcare, logistics, and business services across the GCC area and China. China’s sovereign wealth fund the China Investment Corporation, and Investcorp Capital, alongside private investors from the GCC, are backing the fund.

The firm plans to expand its asset management portfolio from USD 53 to 100 bn, including global projects and Middle East-based investments, Kapoor tells Bloomberg. The firm also plans on capitalizing on more sovereign investors in the upcoming years.

Local real estate appraisal platform Ayen acquired Egyptian construction tech startup Elmawkaa in a SAR seven-figure transaction that will see Ayen integrate Elmawkaa’s construction materials marketplace into its property evaluation platform, according to a press release (pdf).

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The terms: The transaction will see Ayen fully acquire Elmawkaa through a share swap, with the founders and existing investors making a 100% exit from the company, Elmawkaa CEO Ebrahem Anwar told EnterpriseAM Egypt. Anwar and his fellow cofounders Mohamed Thabet and Mahmoud Habib will hold C-suite positions within Ayen as part of the agreement.

The rationale: The acquisition will allow Ayen to integrate Elmawkaa’s materials marketplace into its existing, fee-based property valuation service, part of which involves suggesting potential renovations that could add value to users’ property, Anwar told EnterpriseAM Egypt, explaining that the move will allow Ayen to direct clients to their own in-house marketplace, offering a more integrated experience — alongside contributing to the firm’s expansion in Egypt.

What’s next for Ayen? Post-acquisition, the company plans to kick off an expansion drive in the Egyptian, Saudi, and Emirati markets, with the company looking to Elmawkaa to deepen its presence in Egypt. The company is also set to open a new pre-IPO investment round focused on real estate ins. and project financing, as the company gears up for expansion into new GCC markets, AlMohsen said.

STC’s VC arm tali Ventures led a USD 10 mn series B funding round for Dutch-based trade-in solutions startup NorthLadder, with participation from Dutch Founders Fund and Crescent Ventures, state news agency SPA reported. Information on the breakdown of each investor’s contribution to the round, or on whether the investments are debt or equity-based was not disclosed.

Meet NorthLadder: Co-founded in 2020 by Sandeep Shetty (Linkedin) and Mihin Shah (Linkedin), NorthLadder leverages a proprietary auction engine to automate assessments and improve its device trade-in program that promotes sustainability goals and a circular economy. The company currently operates in more than 10 countries, as per its LinkedIn account.

IN OTHER STARTUP NEWS-

Beta Lab Saudi launched a USD 300 mn fund to support startups in MENA and Southeast Asia, it said in a post on X. The fund was launched with support from a host of local and global partners, including the Ministry of Investment, the Research, Development and Innovation Authority, HKTSP, Telkom Indonesia and its VC arm MDI Ventures.

NAHDI MEDICAL-

Nahdi Medical saw its net income drop 14.4% y-o-y to SAR 182.2 mn in 3Q 2024 on the back of an increase in operating expenses attributed to expansions, it said in a disclosure to Tadawul. Meanwhile, revenues rose 8.8% y-o-y at SAR 2.4 bn due to strong performance in the retail, healthcare, and UAE segments, according to an earnings release (pdf).

On a 9M basis: The company’s net income narrowed 8.2% y-o-y at SAR 662.9 mn during the first nine months of the year. Revenues were up 9% over the same period, with the growth attributed to better performance in the pharma segment on the back of increased prescription flows, more partnerships with medical ins. providers, and the launch of new products, the earnings release explained.

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SADAFCO-

Saudia Dairy and Foodstuff’s net income increased 21.5% y-o-y at SAR 137.1 mn in 3Q 2024, on the back of double digit growth in export and other segments, among other factors, the firm said in a disclosure to Tadawul. Revenues increased 6.1% during the period at SAR 789.6 mn.

On a 9M basis: The dairy player’s bottom line grew 26.1% y-o-y at SAR 391.1 mn during the first nine months of the year, while revenues saw a 6.6% bump at SAR 2.2 bn.

MARAFIQ-

The Power and Water Utility Company for Jubail and Yanbu (Marafiq) saw its net income inch down 1.1% y-o-y at SAR 186 mn in 3Q 2024, with the company attributing the decline to rising fuel costs and a drop in finance income that were partly offset by greater sales, it said in a disclosure to Tadawul. Meanwhile, revenues were up 9.2% at SAR 1.9 bn on the back of greater sales volumes across all segments.

On a 9M basis:Marafiq reported a 35.2% y-o-y decrease in bottomline at SAR 294.1 mn through the first nine months of the year, while top line grew 8.6% during the period at SAR 5.2 bn.

DISPUTE WATCH-

Al Fakhera Men’s Tailoring CEO Sulaiman bin Hamad Al Yahya is currently facing four lawsuits, the company disclosed in its prospectus (pdf) ِfor its upcoming IPO on Tadawul’s parallel market Nomu next week.

The breakdown: One case filed in Riyadh’s Commercial Court against him seeks to claim 58% of his ownership in the company, which could lead to changes in the company’s board, management, and ownership structure. There are also three other lawsuits against him that could lead to a SAR 365k financial impact on the company.

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MINING-

Saudi Gold Refinery secured multiple agreements with Chinese mining firms at China’s Tianjin Mining Conference, according to a press release. Saudi Gold Refinery sealed a technical feasibility study and an EPC contract with Zenith Minerals Company to expedite gold production in the Kingdom from the time of its discovery by up to 70%.

What else? Saudi Gold Refinery also signed an agreement with Sandioss New Materials to introduce eco-friendly chemical reagents to the Saudi gold refining industry, as well as a framework agreement with CNNC - Geological Science and Technology Company to establish exploration and education centers in Saudi Arabia to attract local talent. The company inked a pre-feasibility contract with the Beijing Research Institute of Geology (BRIUG) to implement the latest geological research to accelerate mineral exploration in the Kingdom’s Gunthar region. No timeline or investment tickets were disclosed for the agreements.

MEDIA-

TikTok to train local journalists on using the app: TikTok and the Saudi Research and Media Group Academy are partnering to train local journalists, especially tech journalists, on how to effectively use the app to reach wider audiences, TikTok CEO Xu Ziqiu said in a panel discussion at the FII conference (watch, runtime: 0:21).

DECARBONIZATION-

King Abdulaziz Port in Dammam now boasts the largest fleet of electric trucks in the Middle East, after receiving 80 electric trucks under SAR 7 bn agreements between the Saudi Ports Authority (Mawani) and Saudi Global Ports (SGP), according to a statement from Mawani. SGP procured the trucks from the Chinese heavy equipment manufacturer Sany under a contract they signed in June.

REAL ESTATE-

PIF real estate arm Roshn plans to tap international banks to finance its local projects, PR Manager Alex Maalof told Aleqtisadiah at the FII Forum in Riyadh. The company plans to diversify its financing portfolio after securing SAR 9 bn earlier this month.

RETAIL-

Cenomi Centers is adding 10 new retail brands to the U Walk Mall in Riyadh, according to a press release. The brands are Nike, Nespresso, Adidas, Dry Bar, Massimo Dutti, Pull&Bear, Under Armour, Al Nassr Club, Lenskart, and Jack Morgan.

ALSO- Cenomi is awaiting approval for a new multi-story car park, which will increase U Walk’s total parking capacity to 2k vehicles, the release read.

ICYMI- Al Nassr opened its flagship store at U Walk Riyadh in partnership with Cenomi Centers earlier this week. The store sells official club merchandise and features a cafe.

Google parent company Alphabet’s 3Q 2024 results far exceeded analyst forecasts, with net income up 34% to USD 26.3 bn and revenue increasing 15% y-o-y to USD 88.27 bn, according to the company’s earnings release (pdf). Earnings per share increased 37% at USD 2.12.

Driving the boost: The better-than-expected results suggest that the tech giant’s expensive investments in AI are “paying off with consumers and partners benefiting from our AI tools,” CEO Sundar Pichai said in the release. This return on investment is particularly evident in the company’s 35% growth in cloud service sales to USD 11.4 bn and a ramp up in the numbers of users landing at the company’s market-leading search engine, Bloomberg says. Investors had earlier raised concerns that Google was losing ground on AI to rivals Microsoft and OpenAI and that massive investments to close the gap may fail to bear fruit.

But the DoJ may ruin the party, yet: The US Department of Justice (DoJ) said in a 32-page court filing earlier this month that it was weighing measures that could see Google forced to spin off key divisions, share data, and open access to some platforms following a landmark court decision in August which ruled that the company was in violation of US antitrust laws. The tech behemoth is also facing legal challenges over its ads business. Alphabet CEO Sundar Pichai was critical of the DoJ’s legal campaign, warning on a conference call with investors that the measures could have “unintended consequences” for US leadership in the tech sphere, Bloomberg said.

MARKETS THIS MORNING-

Most Asian markets are in the red ahead of Bank of Japan’s interest rate decision later today, with only mainland China’s Shanghai Index up in trading. Over on Wall Street, futures are also slipping after Microsoft and Meta reported their earnings, dragging down their share prices in after hours trading.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.4% yesterday on turnover of SAR 6 bn. The index is up 0.4% YTD.

In the green: Atheeb Telecom (+6.2%), Red Sea (+5.0%) and MBC Group (+4.6%).

In the red: Sieco (-7.1%), Nahdi (-3.9%) and Al Baha (-3.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.9% yesterday on turnover of SAR 43.2 mn. The index is up 9.5% YTD.

In the green: Naseej Tech (+11.3%), Al Rashid Industrial (+10.40%) and Al Wasail Industrial (+10.4%).

In the red: Sama Water (-9.8%), Al Babtain Food (-8.7%) and Edarat (-6.1%)

Saudi Arabia condemned the Israeli Knesset's decision to approve laws banning UNRWA’s activities in Palestine “in the strongest terms,” state news agency (SPA) reported. The Foreign Ministry described the move as a violation of international laws and UN mandates, while asserting its support for UNRWA’s mission to support Palestinian refugees.