The Weekly Circuit
đ Good Monday morning in the Middle East!
With the new year taking shape, Saudi Arabia is asserting itself not just as the regionâs biggest market, but as likely to overtake India as the worldâs fastest-growing economy with a GDP increase projected at 7.6%. Fortified by oil prices that reached a 14-year peak, the kingdomâs sovereign wealth fund extended its spending spree in 2022. Besides pouring money into Crown Prince Mohammed bin Salmanâs $500 billion Neom megaproject, the Public Investment Fund bankrolled the new LIV golf tour, which poached Phil Mickelson and other star players from the PGA. Now the $600 billion fund is reportedly considering the purchase of pro wrestlingâs WWE franchise and has set a target to more than triple its assets under management by 2030 to $2 trillion. The fund’s big spending has deepened a power struggle between the crown prince, who is also prime minister, and government financial professionals, the Wall Street Journal found.
Across the Red Sea, Israelâs vaunted startup ecosystem is struggling to recover from the world economic slowdown that crimped venture capital funding last year and led to a widening stream of layoffs. Global venture funding in 2022 declined 35% to $445 billion from the $681 billion invested in 2021, according to data compiled by Crunchbase. Funding for Israeli startups sank by 45% to $13.9 billion. Right out of the gate in 2023, Israeli video cloud platform Kaltura, which trades on Nasdaq, announced that it plans to lay off 11% of its workforce.
Among the bright spots for Israel has been Mobileye Global, the Intel-controlled maker of self-driving car systems that sold shares in an IPO last year and has seen its market value rise to $25 billion. Appearing in Las Vegas at the mammoth annual CES conference last week, Mobileye CEO Amnon Shashua said the company is confident that sticking to its strategy of pioneering autonomous vehicle technology will yield consistent profit growth without selling cars or managing fleets. âMobileye has no intention of becoming a robotaxi operator,â Shashua said.
Michael Granoff, founder of the Tel Aviv-based Maniv Mobility venture capital fund, was also at the consumer electronics show, where he called attention to one of his portfolio companies, Harbinger Motors, which recently unveiled the first ground-up electric vehicle system for medium-duty trucks. Speaking to Jewish Insider, Granoff said he looks forward each year to the party thrown by the âAutonocastâ podcast. âItâs basically prom for a mobility industry geek,â he said.
Welcome to the 2023 edition of The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].
Spread the word! Invite your friends to sign up.đ
GROWTH CAPITAL
General Atlantic doles out $1 billion to Israeli startupsÂ
When Max August was a Harvard undergraduate, he scraped data from 8,000 startups and 11,000 of their founders to complete a senior thesis on Israelâs fast-maturing tech scene that was supervised by former U.S. Treasury Secretary Lawrence Summers. Three years later, many of those same Israeli entrepreneurs are vying for the attention of the young investor, who has helped distribute close to $1 billion on behalf of General Atlantic, one of the worldâs biggest private equity funds, Shoshanna Solomon reports for The Circuit. Most prominent of nine companies in the firmâs Israel portfolio is Mobileye Global, the Intel-controlled maker of self-driving technology that held an IPO in October and is currently valued at about $25 billion.
Bigger visions: After starting as an intern at the Park Avenue firm, August was sent to Tel Aviv as an associate last year to scout investment opportunities, opening an office in the 61-story Azrieli Sarona Tower where he gazes over the Mediterranean coast. Alongside Alex Crisses, a managing director from New York who shuttles to Israel to meet with strong prospects, General Atlantic last month recruited Yoram Teitz, who was managing partner in Israel at accounting powerhouse EY, as a senior adviser. âIsrael is moving from a venture-capital-only market to a later-stage market, where you’ll find bigger companies [and] entrepreneurs who have bigger visions,â Crisses told The Circuit in an interview. âAs a global investor, we wanted to pick the locations that over the next five years will have the most innovative technology. And we really do believe that Israel will be that.â
Global presence: With $73 billion in assets under management and 16 global offices from London to Shanghai, General Atlantic came late to the game in Israel, a tiny Middle Eastern country that has spawned the greatest number of technology startups per capita in the world. Termed a growth equity firm, General Atlantic held back until it saw a growing pattern of Israeli companies raising $100 million and more in a funding round, an indicator of business strength. Similar criteria have drawn other global investment leaders including Blackstone, SoftBank and Koch Disruptive Technologies. According to the Tel Aviv-based IVC Research Center, the number of Israeli companies valued at over $1 billion â dubbed “unicorns” in Silicon Valley â rose from two in 2018 to 42 in 2021. And if Israel was once known primarily for being a powerhouse in cybersecurity and software, he said General Atlantic is looking at the next generation of entrepreneurs in fields ranging from financial services and healthcare to climate technologies.
Mobileye investor: In 2020, the firm led a $210 million fundraising round for AppsFlyer, which uses data analytics to help marketing firms grow. The firm led two $150 million rounds for HiBob, which assists midsized companies in managing human resources. In 2021, it co-led a $543 million funding round for Transmit Security, which authenticates users without employing passwords. Mobileye, which Intel bought for $15.3 billion in 2017, is a model for what brought General Atlantic to Israel. Itâs âreally defining the next chapter of the maturation of Israeli technology,â August said. The firm agreed to buy $100 million of Mobileye shares as part of the IPO.
Arab market: General Atlantic also sees opportunity in Israelâs growing connections with Arab countries, paved by the 2020 Abraham Accords that were signed with the United Arab Emirates, Bahrain, Sudan and Morocco. âIsrael has amazing technology to export,â Crisses said, making it âa real beacon in the area.â General Atlantic launched its BeyondNetZero fund last month, allocating $3.5 billion to support entrepreneurs who deliver innovative environmental solutions while creating durable growth businesses. âWe’re deeply focused on climate in Israel,â August said.
Click here to read the full story.
PLACE IN THE SUN
Tel Aviv white elephant is transformed into trendy, affordable beach hotel
From the outside, the Tel Aviv Textile and Fashion Center looks like a standard Israeli office building. Built starting in the 1960s in the eraâs Brutalist architectural style, the center boasts six high-rise towers and a common space with a sprinkling of cheap stores and workmanâs cafĂ©s that serve basic Israeli fare. Architecturally daring for its day, this hulking whitewashed structure â one of the most iconic landmarks along the cityâs coastline â has long been in decline both as an industry hub and an office option for emerging companies. Much of the expansive, concrete complex overlooking the Tel Aviv beach now stands peeling and neglected. Cue the arrival of the Brown Hotel Group. One of the countryâs fastest-growing hotel chains, its motif is setting up shop in unlikely places and in the process regenerating and reimagining some of the more down-and-out locations as sustainable and affordable tourist hubs, Ruth Marks Eglash reports for The Circuit.
Brutalist boutique: Among its latest offering is Brut â a play on Brutalist â a 222-room boutique hotel that sits interspersed throughout various floors in Gaon House, one of the Textile and Fashion Centerâs towers. The hotel opened last April with just 182 rooms, but as business and companies ended their leases in the crumbling building, Brown took over the space, renovating and opening more rooms and facilities as travelers began to return to Israel amid relaxed COVID-19 restrictions.
Affordable tourism: Itâs part of the hotel operatorâs urban renewal philosophy, Shahaf Segal, PR manager and spokeswoman for the Brown Hotel Group, explained to The Circuit. She listed a similar process for the groupâs 13 other hotels dotted around the city (there are also now Brown Hotels in Jerusalem, Eilat and in Athens, Greece), as well as some now under construction in other iconic landmarks, including one slated to open in the historic former Histadrut workerâs union building. Each hotel, some with just a handful of rooms and others more expansive like Brut, has a slightly different vibe, but the overall goal is to convert existing buildings, as well as the areas around them, into reasonably priced lodgings and tourist centers in expensive cities.
Eclectic mix: The intriguing and intricate process of renewal and replacement can be seen throughout the hotel. Brutâs rooms now occupy the first, second, third, seventh and 14th floors, and are still interspersed with a medical clinic, a car rental office, insurance brokers and accountants. And there is a range of different room styles, spanning from a basic âurban roomâ to an executive suite with a breathtaking sea view to a two-room family suite replete with a kitchenette. All the rooms are simple in design and practical, and all incorporate unique elements of the buildingâs original architecture with many of the signature features of a Brown Hotel: wire metal shelving, ecologically friendly soaps and a coffee maker.
Circuit Chatter
Negev 2.0: Teams from the UAE, Bahrain, Israel, Egypt and Morocco started a three-day meeting in Abu Dhabi on Sunday to plan the second Negev Summit, aimed at developing projects to bolster Arab-Israeli normalization.
Taking Off: Israeli Prime Minister Benjamin Netanyahu will use the $166 million âWing of Zionâ Boeing 767 aircraft he commissioned for official travel in his previous term, which was mothballed by the last administration.
Drink Up: Dubai suspended its 30% tax on alcoholic beverages, and removed the fee for a license needed by individuals to purchase alcohol.
Luxury Orbs: Saudi Arabiaâs Red Sea Global said the first of 73 orb-like floating villas was delivered for its futuristic Sheybarah Island resort, off the kingdomâs western coast.
Diamond Dispute: Rival Qatari royals are in a London court battle over the 70-carat âIdolâs Eyeâ diamond, the largest cut blue diamond, worth an estimated $10 million.
Dashed Dreams: Arab tourism to Israel has fallen short of expectations set by tourism officials following the signing of the Abraham Accords.
Closing Circuit
No HQ Needed: Saudi Arabia modified its order requiring foreign companies to establish regional headquarters in the kingdom, exempting smaller firms worth less than 1 million riyals ($266,000).
Follow the Sun: Israelâs SolarEdge Technologies will acquire U.K.-based Hark Systems to expand its capabilities in energy management and connectivity.
Sensory Perception: Israelâs Opsys Tech, which develops LiDAR sensors for self-driving cars, raised $51.5 million in a Series C funding round.
Wind Power: OPC Energy, a unit of Israeli billionaire Idan Oferâs Kenon Holdings, said its CPV subsidiary will acquire four U.S. wind-powered electric plants in the state of Maine for $172 million.
Yeast Hub: Israel plans to build an R&D hub for fermentation of microorganisms, such as yeast and fungi, as part of efforts to promote investment in food technology.
On the Circuit
Ambassador Mohamed Al Khaja, the UAEâs envoy to Israel, hosted a dinner in honor of new Israeli Foreign Minister Eli Cohen and German Ambassador to Israel Steffen Seibert.
Robbie Williams,the British pop singer, said he hopes to build a hotel in Dubai, comparing the Emirateâs potential as an entertainment hub to Las Vegas.
Carl Peter Foster was named chairman of Israelâs StoreDot, which makes fast-charging batteries for electric vehicles. He was previously CEO of Indiaâs Tata Motors and General Motorsâ president for Europe.
Arik De was promoted by Etihad Airways to be chief revenue officer. He was previously vice president of revenue and commerce for the Abu Dhabi-based carrier.
Shlomi Heisler was appointed director-general of Israelâs Finance Ministry. He was previously chairman of the National Commission for Planning and Building.
Ahead on the Circuit
Jan. 14-15,Abu Dhabi, UAE: Atlantic Council Global Energy Forum. The annual conference will focus on the challenge of managing energy security priorities and decarbonization efforts in tandem. St. Regis Hotel.
Jan. 14-19, Abu Dhabi, UAE: Abu Dhabi Sustainability Week. Event brings together government, corporate, academic figures in preparation for COP28 summit next year in the UAE. Abu Dhabi National Exhibition Centre.
Jan. 16-19, Dubai, UAE: iFX Expo Dubai 2023. Largest financial B2B conference, connecting top executives to large international firms. Dubai World Trade Centre.
Jan. 28-30, Tel Aviv, Israel: Abraham Accords Esports Peace Games. Teams from countries across the MENA region will compete in a digital video-gaming tournament for $82,000 in prize money. Shlomo Group Arena.
Jan. 30-Feb. 1, Tel Aviv, Israel: CyberTech Global Tel Aviv. Conference brings leading executives from computer security companies, senior government officials, investors from over 80 countries across the globe. Expo Tel Aviv.
Culture Circuit
Saudi Superstar: Cristiano Ronaldo will earn a reported $200 million playing soccer for Saudi Arabiaâs Al Nassr club. Appearing at a press conference last week against a backdrop of fireworks and smoke machines, the star forward was presented as the worldâs highest-paid player, though the team declined to disclose the exact numbers in his two-and-a-half-year contract. Ronaldo, who has played for Manchester United, Real Madrid and Juventus, said he turned down offers from clubs in Europe, North America and Latin America to sign with Al Nassr in the Saudi Pro League. Amnesty International called on Ronaldo to speak out against human rights abuses in Saudi Arabia.
Back Home in Ukraine: The photographer Vera Vladimirsky, 38, was born in Ukraine and immigrated to Israel at the age of 7. Her work, now on display in a solo exhibition at the Tel Aviv Museum of Art, explores the relationship between her birth country and her adopted homeland. The exhibition, called âSand Wall,â features colorful, collage-like photographs of her previous apartments in the Donbas region of Ukraine as well as Israel and England, among other things. âI wanted to visit all the places I called âhomeâ to reconstruct my story, to search for a sense of closure, and to find a meeting point between a few places in various moments in time,â she told Jewish Insiderâs Matthew Kassel.
Stolen Relic: A looted ceramic spoon from an archeological site near Hebron that had been in the collection of billionaire New York investor Michael Steinhardt was repatriated to the Palestinian Authority.
Sweet Talk: From the West Bank city of Nablus and Gaza City to Jerusalem and Tel Aviv, the Wall Street Journal talks to Palestinians and Israelis in search of the best knafeh, a traditional Arab pastry baked with curly melted cheese, chopped pistachios and lots of syrup poured on top.
