The Weekly Circuit
👋 Good Monday morning in the Middle East!
With pressure to cut carbon emissions, oil climbing to $100 a barrel and new regulations to meet net zero targets, the stakes could not be higher as the major players in oil and gas convene in Abu Dhabi starting today for the world’s biggest gathering of the energy industry.
The four-day Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) is set to welcome over 160,000 attendees and 2,200 exhibiting companies, as well as energy ministers from Bahrain, Egypt and Turkey. Global executives from ADNOC, Aramco, BP, Exxon, AWS, KPMG and hundreds of others, will discuss new operating models and alternative energies like hydrogen, even as the United Arab Emirates moves to boost oil output capacity until at least 2027.
While the annual conference has put the energy transition at the top of its agenda for the better part of a decade, the UAE is under the microscope of international media as it gets ready to host the United Nations climate conference COP28 at the end of November. In a warm-up for the U.N. event, COP28 president-designate Sultan Al Jaber convened a meeting on Sunday of energy industry leaders to brainstorm ideas for “a just, equitable and orderly energy transition.” Among the participants was John Kerry, the U.S. special presidential envoy for climate.
On the schedule to speak at ADIPEC are OPEC Secretary-General Haitham Al Ghais, UAE Minister of Energy and Infrastructure Suhail Al Mazrouei, Shell CEO Wael Sawan, TotalEnergies Chairman and CEO Patrick Pouyanne, the CEO of Italy’s Eni, Claudio Descalzi, as well as Hardeep Singh Puri, India’s minister of petroleum and natural gas.
“By 2030, the world will be home to an additional half a billion people, demanding more energy every year,” Tayba Al Hashemi, chief executive of Adnoc Offshore and chair of this week’s ADIPEC 2023 conference, said in a statement. “At the same time, the global challenge of climate change calls for urgent, game-changing solutions to eliminate emissions.”
Apart from the oil industry, third-quarter reports show that international investors remain cautious when it comes to startupsin the Middle East and North Africa. In Israel, the past three months marked the seventh consecutive quarter in which investments declined, according to data published by the Start-Up Nation Policy Institute. Total investments dropped 40% in the third quarter of 2023 to $1.7 billion, compared to the same period last year. Investments in the first three quarters of 2023 were down 63% to $5.6 billion from the corresponding period last year.
Startups raised more money during late-stage funding rounds in the broader MENA region – not including Israel – compared to the global average this year, but international investor interest is waning, according to new data from Dubai-based Magnitt. While investors outside MENA contributed 57% of late-stage venture capital investments from 2019 to 2022, that number sank to 13% during the first half of 2023.
Welcome to The Weekly Circuit. Read on for the stories, deals and players at the top of the news across the MENA business landscape. Please send comments and story tips to [email protected].
Can Lucid jump-start the electric vehicle industry in Saudi Arabia?
Saudi Arabia’s push to develop an electric vehicle industry took a step forward last week when California-based Lucid Motors opened the kingdom’s first automobile factory, James Haines-Young reports for The Circuit.
Aiming high: With initial plans to assemble 5,000 EVs a year at its new plant outside the western port city of Jeddah, Lucid expects to boost that number in time to 155,000, underlining Saudi Arabia’s ambition to become a significant manufacturer. It would be a major leap as much for the country as for the luxury carmaker, which produced 7,180 vehicles last year at its sole factory in Casa Grande, Ariz., hampered by supply chain issues and recalls.
Tesla rival: By comparison, Elon Musk’s Tesla sent almost 1.4 million cars off its assembly lines in the U.S., Germany and China last year. Riyadh is looking to supply the domestic market but also to transform the kingdom into a regional car hub as it diversifies its economy beyond oil revenue – and it’s looking beyond Lucid to meet its aims.
China deal: While the kingdom’s Public Investment Fund has put a total of $5.4 billion into the loss-making Lucid to become its largest shareholder, the government has also signed a $5.6 billion deal with China’s Human Horizons to develop and manufacture EVs. Meanwhile, major players from Hyundai to Peugeot have already said they see a road to Middle East manufacturing and sales of EVs running through Saudi Arabia.
Microchips and components: The kingdom is eyeing the domestic development of EV parts both for home and export as well. PIF, Saudi Arabia’s sovereign wealth fund, and Taiwanese manufacturing giant Foxconn founded the Saudi electric car company Ceer Motors in 2022 and the pair is in talks to build a $9 billion plant to manufacture microchips and electric-vehicle components.
Saudi Arabia’s $800 billion tourism plan starts to take shape
Four years after opening up to international tourists for the first time, Saudi Arabia marked progress on its massive $800 billion investment drive to lure travelers as it played host to the United Nations’ World Tourism Day, Rebecca Anne Proctor and Kelsey Warner report for The Circuit.
World stage: Riyadh welcomed over 500 government officials, investors, international press and U.N. delegates from 120 countries last week to underscore the importance of the global tourism industry. The occasion was also an opportunity for Saudi Arabia to set out more bold plans for its young tourism sector as it seeks to diversify its economy beyond oil revenues.
Hotel deals: “If you want to introduce your country to the world, then tourism is the best way to do it,” Zurab Pololikashvili, secretary-general of the U.N. World Tourism Organization, said during a roundtable discussion. Neom has signed around 18 hotel deals – including with luxury brands like JW Marriott, The W and German boutique concept 25Hours – and has a target of 200 total, most of them to be built on The Line, a spokesperson for Neom Hotel Development told The Circuit.
Ski slopes: First unveiled by Crown Prince Mohammed bin Salman in 2017, Neom is a $500 billion mega-project in the northwest of the country along the Red Sea coast, with construction underway on a variety of zones such as a mountain ski resort, an island getaway, a major port and a city-of-the-future concept known as The Line, where the majority of the hotels will be built.
Tourism school: The flurry of deals in Neom marks a shift for the kingdom, which has always catered primarily to Muslim pilgrimage tourists. Saudi Arabia’s minister of tourism, Ahmed Al-Khateeb, announced the creation of the Riyadh School for Tourism and Hospitality to build a pipeline of talent to staff the fast-growing industry. Set to open in 2027, it will cost more than $1 billion to build and be located in the capital’s entertainment and tourism project known as Qiddiyah.
⛳ Golf Pairing: Billionaire Henry Kravis, Ari Emanuel’s Endeavor Group and Fenway Sports Group have shown interest in investing in the PGA Golf Tour as an alternative to its merger with the Saudi-backed LIV Golf tournament, which faces opposition in Congress, Bloomberg reports.
🖥️ Ransomware Battle: Kuwait is trying to secure government computer systems after a ransomware attack was directed against the Ministry of Finance.
⛰️ Checking In: The first W Hotel in Saudi Arabia will open in Neom’s mountain district, which is under development as the first outdoor ski resort in the Gulf.
🧪 Living Lab: Abu Dhabi will open a biobank of stem cells and tissues to advance its ambitions in medical research and personalized medicine.
🔋Charged Up: South Korea’s LG Chem and a unit of China’s Huayou Group set up a partnership to build a factory in Morocco for electric vehicle battery materials.
🛢️ Energy Search: Egypt’s state-owned oil companies launched an international tender for exploration contracts in 23 new areas, including near the Suez Canal and the Red Sea.
💻 Employee Satisfaction: Ekar, a contactless car rental company, is the best UAE startup at which to work, according to a ranking by LinkedIn.
📈 Market Moves: Tabby, one of the MENA region’s biggest fintechs, will relocate its headquarters from Dubai to Riyadh as it prepares for an IPO on the Saudi Exchange.
🛂 Easy Visa: The U.S. eased entry conditions for Israeli citizens under its Visa Waiver program after Israel agreed to lift many restrictions for Palestinian-American visitors.
🛥️ Gas Carriers: QatarEnergy signed a $3.9 billion deal with South Korea’s HD Hyundai Heavy Industries to supply it with 17 carriers for shipping liquefied natural gas.
🏥 Healthy Option: Abu Dhabi’s Mubadala is looking to make its first move in the booming health-care sector in India, eyeing a less than 10% stake in Manipal Hospitals, Reuters reports.
💰 Changing Expectations: Saudi Arabia revised its forecast of a budget surplus for next year and now projects a $21 billion deficit.
💵 Direct Lending: Centerbridge will launch Overland Advisors to invest in middle-market North American companies with an anchor equity investment from ADIA and Wells Fargo.
💣 Smart Arsenal: UAE defense conglomerate Edge acquired a 50% stake in Brazilian smart weapons specialist SIATT for an undisclosed amount.
🔌 Energy Diversity: Saudi Aramco agreed to buy a $500 million stake in MidOcean Energy, its first investment in liquefied natural gas as it looks to diversify beyond oil.
🚀 Missile Defense: Germany signed an agreement to pay $3.5 billion for Israel’s Arrow 3 defense system, which is designed to intercept long-range ballistic missiles.
💵 Fair Trade: Egypt signed a local-currency swap agreement worth around $1.4 billion with the UAE, seeking to soften its economic crisis.
💰 Limiting Liability: International Holding Company, the second largest listed company in the Middle East, will sell its stake in two of India’s Adani Group companies as Adani’s billionaire owner faces allegations of fraud.
🏭 Made In UAE: Abu Dhabi is rolling out a $2.7 billion economic plan to more than double its manufacturing sector.
☁️ Skyward Expansion: Gem Security, an Israeli cloud security startup, raised a $23 million Series A round led by GGV Capital, with participation from IBM Ventures.
On the Circuit
Su Zhu, the founder of Three Arrows Capital, a cryptocurrency hedge fund that collapsed last year and which is facing fines in Dubai, was arrested over the weekend in Singapore.
Abdulla bin Touq Al Marri, the UAE’s minister of economy, touted a plan for visa-free travel among Gulf countries at the Future Hospitality Forum held in Abu Dhabi last week.
Gerry Grimstone, former U.K. minister and Barclay’s chairman, has been tapped by Bain & Co. to oversee a project with Saudi Arabia’s investment ministry.
Eynat Guez, CEO of Israel’s Papaya Global payment platform, was invited to speak at Saudi Arabia’s World Fintech Show in December.
Sting will headline the New Year’s gala at Dubai’s Atlantis The Palm Hotel with dinner tickets going for $1,500 a plate to hear the Grammy-winning British musician perform.
F1 Fever: Qatar is getting ready to host Formula 1 racing for just the second time, having relaid the asphalt and installed a new drainage system on the 3.4-mile track at the Lusail International Circuit in Doha, where the three-day Grand Prix starts on Friday. The small Gulf state hosted Formula 1 for the first time in 2021, skipped last year and begins a 10-year contract this week to host the annual car race. Concerts accompanying the event will feature American pop sensation Bruno Mars and Egyptian crooner Amr Diab.
Office Space: Art PR and branding agency Pelham Communications is opening a Dubai outpost amid a steady stream of work coming from the Middle East to develop cultural and heritage projects. With offices already in London and New York, the agency has current clients in the region that include the Abu Dhabi Department of Culture & Tourism, the Royal Commission for Riyadh City and the Royal Commission of AlUla and the Museum of African Contemporary Art Al Maaden in Morocco.
NBA Warm-up: The Dallas Mavericks and the Minnesota Timberwolves landed in Abu Dhabi for two preseason basketball games ahead of the NBA season. The teams will square off on Oct. 5 and 7 at the Etihad Arena.
Ahead on the Circuit
Oct. 2-5, Abu Dhabi, UAE: ADIPEC 2023. Abu Dhabi International Petroleum Exhibition & Conference brings oil industry together to discuss trends and strategy. Abu Dhabi National Exhibition Centre.
Oct. 8-10, Abu Dhabi, UAE: Forbes Middle East Healthcare Summit. Experts and practitioners coming together under the theme “Health For Everyone: Advancing Healthcare.” The St. Regis Saadiyat Island Resort.
Oct. 9-12, Riyadh, Saudi Arabia: MENA Climate Week. Hosted by Saudi Arabia, a convening of regional stakeholders ahead of COP28. The Boulevard Riyadh City.
Oct. 9-15, Marrakech, Morocco: Annual Meetings of the World Bank and International Monetary Fund. Financial leaders from governments and industry chart direction for coming year. Bab Ighli campus.
Oct. 16-20, Dubai, UAE: GITEX. The biggest consumer technology and startup show in the world. Dubai World Trade Center.
Oct. 16-20, Dubai, UAE: AI Everything. Hosted by the UAE’s minister of state for artificial intelligence and held on the sidelines of GITEX. Dubai World Trade Center.
Oct. 16-20, Abu Dhabi, UAE: World Investment Forum. A gathering of global leaders brought together by the United Nations Conference on Trade and Development to tackle issues related to sustainable development. ADNEC Abu Dhabi.
Oct. 17-19, Tel Aviv, Israel: Agritech Israel. Showcase for companies developing agricultural, water and food technologies. David Intercontinental Hotel.
Oct. 19, Tel Aviv: Israel Machine Vision Conference. Startups, investors meet to discuss issues including computer vision, medical imaging and artificial intelligence. Expo Tel Aviv.
Oct. 24-26, Riyadh, Saudi Arabia: Future Investment Initiative. An annual gathering of executives, investors and government officials exploring the future of investment. The Ritz Carlton.
Oct. 29-31, Riyadh, Saudi Arabia: Global Health Saudi. A gathering of Saudi and international players in health care and medical devices. Riyadh Front Exhibition & Conference Center.
Oct. 30-31, Dubai, UAE: AIM Summit. A meeting of leaders from the alternative investment industry including hedge funds and private equity to discuss market trends and opportunities. Jumeirah Emirates Towers.
Oct. 31-Nov. 1, Abu Dhabi, UAE: Abu Dhabi Smart City Summit. Bringing together key government and private organizations to collaborate and discuss initiatives and technology requirements to make Abu Dhabi a leading global smart city. Conrad Hotel.