The Weekly Circuit
👋 Good Monday morning in the Middle East!
Record IPO: Investors this week will be watching Borouge after the petrochemical plastics maker carried out Abu Dhabi’s biggest-ever IPO and surged more than 20 percent on its first day of trading. The company, a joint venture between the Abu Dhabi National Oil Company and Austrian chemical maker Borealis AG, raised $2 billion in its June 3 share sale, which was oversubscribed by 42 times. Borouge’s market value soared to above $24 billion.
Growth Enabler: The Abu Dhabi IPO’s success is another example of how investors are fueling a stock market boom across the Gulf while the rest of the world buckles under the weight of the Ukraine conflict and spreading economic slowdown. In the words of Sultan Al Jaber, the UAE Minister of Industry and Advanced Technology, who is chairman of Borouge and managing director of ADNOC, the stunning debut reinforces the national oil company’s “continued role as the critical enabler of growth and expansion of the UAE economy and private sector.”
Where’s Joe: This week’s top guessing game is whether President Joe Biden will be visiting the Middle East anytime soon. First he appeared to be on track to land in Israel later this month. Then the White House started buzzing about Air Force One heading from Tel Aviv to Riyadh for a bid at rapprochement with Saudi Crown Prince Mohammed bin Salman, whom Biden has long said should be held to account for the killing of journalist Jamal Khashoggi. Before the weekend, the administration pulled back and said no Mideast trip is being planned before July.
Calling Qatar: Gulf investors, meanwhile, are showing interest in the multitude of tech start-ups germinating in Israel, as Michael Eisenberg, co-founder of the Tel Aviv-based venture capital fund Aleph, told The Circuit in an interview excerpted below. Among the standout companies in his portfolio is Freightos, which secured a Nasdaq listing last week through a SPAC merger and disclosed that Qatar Airways is one of its key inventors.
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Gulf-Israel investors can weather political discord by cultivating personal ties, Aleph’s Eisenberg says
As an early investor in WeWork, Michael Eisenberg says he doesn’t let the inevitable ups and downs of a young, disruptive company shake his faith when he strongly believes in its product.
Confident in Gulf: Similarly, the co-founder of Tel Aviv-based venture capital fund Aleph told The Circuit’s Jonathan Ferziger in an interview that he’s confident in Israel’s budding relationship with the Arab Gulf states and excited about the prospects it presents for the more than 40 companies in his investment portfolio. Ongoing conflict with the Palestinians and lingering hostility even in countries such as Egypt and Jordan that signed peace treaties, he said, are unlikely to derail the 2020 Abraham Accords, which normalized Israel’s ties with the United Arab Emirates, Bahrain and Morocco.
Building Trust: “The Emiratis are relationship people and they believe in long-term relationships,” said Eisenberg, 51, a native New Yorker who immigrated to Israel after college and whose fund has about $850 million under management. “It will last if we build trust.”
Qatar Invests: Aleph’s stable of startups has proven attractive to Gulf investors. Freightos, an online marketplace that helps businesses find favorable sea and air cargo shipping rates, said last week that Qatar Airways is among its investors — together with FedEx and several airlines in Europe and Latin America. The disclosure came as Freightos agreed to merge with a special purpose acquisition company (SPAC) that will give it a Nasdaq listing and a pro forma enterprise value of $435 million. Freightos is registered in the Cayman Islands. It has offices in Jerusalem; Hong Kong; Barcelona, Spain; Miami, Florida; and Ramallah, West Bank.
Tapped by Abu Dhabi: Aleph itself was one of six funds chosen by Mubadala, the $250 billion sovereign wealth fund of Abu Dhabi, to distribute $100 million in investment to Israeli startups, according to the Wall Street Journal. Eisenberg declined to confirm the report, though he said Mubadala executives recently came to visit his team at Aleph’s airy downtown Tel Aviv offices, which is in a restored century-old hotel on Rothschild Boulevard.
Read the full story here.
Saudis positioning for next move as Israel, UAE sign free-trade pact, Emirati venture capital chief says
The free-trade agreement signed last week between the United Arab Emirates and Israel is generating interest among investors in Saudi Arabia who are making plans for the possibility their own government will soon normalize relations with the Israelis, an Emirati venture capitalist said.
Looking for an opening: “I would expect that Saudi businessmen are just going to watch, learn and try to position themselves for if and when anything opens up” with Israel, said Sabah al-Binali, executive chairman of OurCrowd Arabia, a UAE-based unit of Israel’s OurCrowd venture capital platform.
Signed in Dubai: Al-Binali spoke to reporters following a May 31 ceremony in Dubai in which Israeli Minister of Economy and Industry Orna Barbivai and Emirati Minister of State for Foreign Trade Thani Al Zeyoudi signed the agreement. Some 96 percent of goods traded between the two countries, including food, agricultural products, cosmetics, medications and medical equipment, will be exempt from customs duty under the pact.
Biden in Mideast: The effort to tear down trade barriers between Israel and the UAE comes nearly two years after the two nations and the Gulf state of Bahrain signed the U.S.-brokered Abraham Accords, normalizing relations between the former Middle East adversaries. U.S. President Joe Biden may travel to both Israel and Saudi Arabia next month.
GCC next?: As Arabs and Israelis grow more comfortable with each other, Al-Binali said it’s time to start work on a more comprehensive regional framework for the holdouts to the Abraham Accords: Saudi Arabia, Kuwait, Qatar and Oman. “It’s one thing to go do six bilateral free-trade agreements,” Al-Binali said in the discussion with reporters by Zoom. “The interesting question is can Israel end up at some point in the future doing a single, bilateral, free-trade agreement with the GCC [Gulf Cooperation Council] itself?
Read the full story here.
Desert Towers: Saudi Arabia is planning to construct the world’s largest buildings in Neom, its futuristic $500 billion megacity. The twin skyscrapers are expected to be about 500 meters (1,640 feet) tall and stretch horizontally for dozens of miles. Meanwhile, the Wall Street Journal reports that expatriate executives recruited to help build Neom are leaving amid workplace culture clashes with Saudi executives.
Going Up: Tel Aviv housing prices rose 14 percent in the first quarter of 2022, four times Israel’s national average. An average apartment in Israel’s biggest city now costs almost $1 million.
Avoid Disaster: The World Bank said Lebanon will have to adopt a credible, comprehensive and equitable macro-financial stabilization program if it wants to avoid total destruction of its social and economic fabric.
Crypto Gulf: Oman’s central bank is developing a digital currency and opening up banking services, Executive President Tahir Al Amri said at a conference in Muscat.
Screen Time: The size of the Middle East and North Africa gaming market is projected to increase to more than $5 billion by 2025, a 19 percent jump from 2019.
Green Hydrogen: Egypt’s Suez Canal Economic Zone and H2-Industries have signed a memorandum of understanding to build a waste-to-hydrogenfacility in east Port Said with an estimated cost of $4 billion, with capacity to produce 300,000 tons of green hydrogen per year.
Saudi Search: Google will set up two new offices in Saudi Arabia, located in Riyadh and al-Dammam. The U.S. search giant is also building a data partnership with Saudi Aramco.
Bus Fare: Nearly all the shareholders in Israel’s Egged bus companyapproved the sale of a 60% stake to the Keystone Fund, which invests in infrastructure development, for 2.8 billion shekels ($838 million).
Steak Stake: The owner of the Nusr-Et steakhouse, known by its founder’s Salt Bae meme, is in talks to sell a stake to Qatar’s $450 billion wealth fund.
Green Tarmac: UAE airport services unit dnata plans to invest $100 million on green operations in the next two years, as part of wider plans to halve its carbon footprint by 2030.
Funds for Labor: Hourly.io, an Israeli-founded payroll startup based in Palo Alto, Calif., said it has raised $27 million in a Series A funding round led by Glilot Capital Partners.
Data Dollars: Israeli data analytics startup Coralogix said it has raised $142 million as part of a series D funding round.
On the Circuit
Ted Sarandos, CEO of Netflix, plans to visit Israel in late June in an effort to stop legislation that would require international streaming services to invest in the production of original Israeli content.
Omran Sharaf, project director of the Emirates Mars Mission, was namedthe next chairman of the United Nations Committee on the Peaceful Uses of Outer Space and will serve a two-year term.
Nelson Peltz, whose Trian Fund Management LP owns a 1.5 percent stake in Unilever, will join the company’s board this summer. Peltz met with Unilever last year in a bid to stop the company from dropping its Israeli licensee because it sells products in what Unilever subsidary Ben & Jerry’s called “Occupied Palestinian Territory.”
Ahead on the Circuit
June 7-8, Dubai: Bonds, Loans and Sukuk Middle East. Conference brings together issuers, investors and bankers to discuss bond, syndicated loan and sukuk markets. Madinat Jumeirah.
June 14, Haifa, Israel: Technovation Conference 2022. Contemplating the future of technology businesses in Israel. Churchill Auditorium, Technion Israel Institute of Technology.
June 20-22, Doha, Qatar:Qatar Economic Forum. Sponsored by Bloomberg,the conference focuses on new Middle East frontiers for technology. Ritz-Carlton, Doha.
What’s Old is new
In Egypt, an effort to restore the country’s historic synagogues and bolster tourism
Since mid-April, Cairo’s 1,140-year-old Ben Ezra Synagogue has been under renovation as part of the Egyptian government’s efforts to resurrect the slumbering Jewish heritage in Egypt that resonates around the world. According to popular folklore, the synagogue is situated on the site where baby Moses was discovered. It is by far the oldest Jewish temple in Cairo. Rebecca Anne Proctor reports from Cairo for Jewish Insider on the restoration work underway.
Built by history: Located amid some of the oldest Coptic churches in the country as well as the oldest mosque in Egypt, the Mosque of Ibn Tulun, the synagogue, which dates to circa 882 CE, is sometimes referred to as the El-Geniza Synagogue or the Synagogue of the Levantines. The area where it is situated, formerly the center of El Fustat, the first Islamic capital of Egypt built by Amr Ibn El Aas in 642 CE, presents a unique cluster of ancient religious buildings spanning all monotheistic religions. “The building serves as witness to the freedom of religious belief Egypt had,” Femony Anwar Okasha, an Egyptian researcher in heritage who guides tours through Old Cairo, told The Circuit.
Government support: The renovations are funded by the Egyptian Ministry of Tourism and Antiquities. The head of the committee supervising the restoration process, Mustafa Abdel-Fattah, told El Watan News that the renovation work includes insulating surfaces to protect against moisture, treating cracks, cleaning the walls and protecting color layers from the ravages of weather.
New friends: Analysts say that the project is part of the Egyptian government’s aim to attract more tourists to the country. It is also, says Yoram Meital, a professor in Ben-Gurion University’s Middle East studies department and Egypt specialist, indicative of a growing Egyptian interest in its Jewish heritage dating back to the 2011 Arab Spring uprisings, which has increased since normalization between Israel and several Gulf Arab nations. “The Jewish past in Arab countries, not only in Egypt, has gained widespread public recognition and respect in recent years, and this is a new development,” explained Meital.