The Daily Circuit
👋 Hello from the Middle East!
Today in The Daily Circuit, we’re looking at how holiday cruise ships are avoiding the Red Sea, the diminishing Russian appetite for UAE real estate, ADQ’s interest in Polish poultry and a 122-story residential tower going up at the Dubai marina. But first, a report on the growing impact of sovereign wealth.
From artificial intelligence to renewable energy, Gulf sovereign wealth funds have become the go-to source for startup investment in a tight global economy. A new study from Bain & Co. gives a graphic view of why Silicon Valley titans and New York financiers have been making pilgrimages to the Public Investment Fund in Riyadh, Mubadala in Abu Dhabi and the Qatar Investment Authority in Doha.
The Bain report, released on Wednesday, showed that 86% of Middle East business deals last year came from sovereign funds, up from 84% in 2022 and 68% in 2018. The total value of those deals was an estimated $95 billion in 2023, down from a high of $98 billion in the previous year and more than triple the $26 billion recorded in 2018.
“The region’s sovereign wealth funds sit on an abundance of capital that they are using to accelerate an economic transformation, including an aggressive diversification away from hydrocarbon and an ambitious shift toward deals in Asia,” says the report, written by Bain’s Tom De Waele, Grégory Garnier, Riccardo Molinari and Elif Koc.
In their analysis of the sovereign wealth phenomenon, the authors look at how the funds have been used to build new industries such as esports in the Gulf, noting the $4.9 billion acquisition by PIF-owned Savvy Games of California-based Scopely in July. The shift toward Asia is illustrated in Mubadala’s co-leading a $2 billion investment last November in the Chinese online fashion company Shein, as well as the $1 billion that the QIA sank into India’s Reliance Retail Ventures in September.
The report examines the role that sovereign funds are playing in the energy transition, noting that commitments made to net-zero goals require them to “actively advocate for emissions reduction in portfolio companies and evaluate investments in enabling decarbonization technologies.”
📰 Developing Stories
RED SEA RISK
As military efforts by the U.S. and its allies have failed to deter attacks in the Red Sea, more shipping lines are finding alternate routes. Along with cargo vessels, cruise operator Carnival said on Wednesday that it will probably not be sailing through the waterway until next year because of the persistent assaults on shipping traffic by Yemen’s Houthi militants. Royal Caribbean and MSC Cruises have also canceled trips. The number of vessels sailing through the southern Red Sea is down about 70% compared with the start of December. Container shipping has dropped about 90% and gas tankers have also ceased nearly all trips.
CLOSE WATCH
Russians are starting to cool on Dubai real estate and Kremlin-linked oil firms are facing payment delays as UAE banks become more cautious about adhering to international sanctions. Emirates NBD, Mashreq Bank and First Abu Dhabi Bank are among the firms that have upped their scrutiny of Russian entities in recent months, Bloomberg reports. Oil firms, meanwhile, are waiting several months to be paid for crude and other fuels as banks in the UAE, China and Turkey have become more cautious about possible violations of U.S. secondary sanctions, Reuters reports. In February, the UAE was dropped from a global watchdog’s list of countries at risk of illicit money flows, a coup for a country that is aiming to present its two largest cities, Dubai and Abu Dhabi, as model international financial hubs.
💲 Sovereign Circuit
Abu Dhabi Investment Authority: Swiss skincare company Galderma said on Tuesday the underwriters for the company bought an additional 5.6 million shares from one of its shareholders, Sunshine SwissCo AG (EQT) for 298 million Swiss francs ($329.83 million). Sunshine SwissCo is a wholly owned subsidiary of ADIA and Auba Investment, Reuters reports. The Cetaphil maker went public last week on the SIX Swiss Exchange in what could be the largest IPO in Europe this year.
ADQ: ADQ is mulling a bid for Cedrob Group, Poland’s biggest poultry and meat producer, as it looks to make investments that support the UAE’s future food security, Bloomberg reports. Taqa, an Abu Dhabi energy company wholly owned by ADQ, and Japan’s Jera have signed an agreement with a Saudi Aramco joint venture to build an electricity and stream generation plant to power a petrochemical complex in Jubail, Saudi Arabia.
↪↩ Closing Circuit
🌆 Living High: Six Senses, a unit of IHG Hotels & Resorts, and Dubai-based developer Select Group signed an agreement to manage the apartments in a 122-story building being built at the Dubai Marina that will be the world’s tallest residential tower when completed in 2026.
🇹🇳 No Thanks: Tunisia’s parliament stopped the Qatar Fund for Development from operating in the country, sacrificing some $150 million in financing over perceived threats to independence.
🇮🇳 India Office: Israel Aerospace Industries opened an Indian subsidiary, AeroSpace Services India, in New Delhi, where it will provide support for missile sales and other products used by the Indian army, navy and air force.
🗣 Circuit Chatter
🛏️ Rental Boom: Airbnb listings have more than doubled in Dubai to almost 25,000 over the past three years after the emirate was named the world’s most profitable location for the apartment rental platform’s landlords in 2022, The National reports.
🛥️ Ahoy Sailors: The Saadiyat Marina & Ferry Terminal has been inaugurated, opening up a range of new amenities for seafarers on the western end of the island, including 64 floating pontoons for mooring, a 10-meter wide slipway, 12 dry berths and a ferry terminal providing links to neighboring islands.
🛢️ Oil Flow: The UAE’s national oil company ADNOC announced that it has started production from its Belbazem offshore block, a joint venture with China National Petroleum Corporation.
🌍 Power Circuit
Saudi Crown Prince Mohammed bin Salman, who is Chairman of Soudah Development, said the new tourism destination on Saudi Arabia’s highest peak is “above the clouds” and will open to visitors in 2027.
Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi and Chairman of Abu Dhabi Executive Council, spoke on the phone with Gibran Rakabuming Raka to congratulate him on his election as Vice President of Indonesia.
➿ On the Circuit
Tareq Al Sadhan was named CEO of Saudi National Bank, the kingdom’s largest lender, replacing acting CEO Talal Al Khereiji. He starts May 1.
Abbas Rizvi was named CFO of Investcorp, a Bahrain-based asset manager that counts Mubadala Investment Co. as its biggest shareholder. He has been with the company for 19 years.
Abdulla Salem Al Nuaimi, CEO of the Abu Dhabi Securities Exchange (ADX), said in a statement to the Emirates News Agency WAM that the ADX was the market for 75% of the IPOs in Gulf countries last year and he expects the positive trend to continue in 2024.
Alex Karp, Co-founder and CEO of Palantir, will come to Washington May 1 with some 100 other tech leaders for a conference focused on increasing government support for AI and protecting against competition from China.
Joseph Lieberman, the former U.S. Senator and Democratic nominee for Vice President in Al Gore’s unsuccessful White House bid in 2000, died on Wednesday at 82.
🎶 Culture Circuit
🐬 Ocean Life: The value of Marine Protected Areas for tourism and local fishing industries is in the billions, according to a comprehensive global assessment. The new study of 51 protected areas across more than 30 countries looked at ecosystems including coral reefs, mangroves, kelp forests and salt marshes, and found that establishing national parks at sea helped ocean life bounce back, providing many benefits to humanity, including hefty economic returns.
📷 Photo of The Day
📅 Circuit Calendar
Daniel Kahneman, the Israeli-American psychologist who shared the 2002 Nobel Prize in economics for his research into how people make decisions amid uncertainty, died on Wednesday at 90.
Apr. 9, New York. The Information’s Private Capital Conference. An exclusive event for subscribers to join Founder and CEO Jessica Lessin and The Information’s reporters to discuss the future of technology and investing. New York Stock Exchange.
Apr. 16-17, Abu Dhabi, UAE. Green Hydrogen Summit 2024. Bringing together experts, policymakers, and industry leaders to explore opportunities and the industry’s future. Abu Dhabi National Exhibition Center.
Apr. 16-18, Abu Dhabi, UAE: World Future Energy Summit 2024. A platform to showcase the solutions to some of the most critical challenges identified at COP28. Abu Dhabi National Exhibition Center.
Apr. 16-18, Dubai, UAE. Middle East Energy. Energy leaders gather to debate and shape the future. Dubai World Trade Center.
Apr. 23-25, Dubai, UAE: GISEC Global. A forum for furthering the key discussions that are helping to define cyber resilience and connecting the global cybersecurity community. Dubai World Trade Center.
Apr. 25-26, Abu Dhabi, UAE: DriftX. An event for smart, autonomous and sustainable urban mobility across air, land, and sea organized in partnership with the Abu Dhabi Investment Office, Abu Dhabi’s Smart and Autonomous Vehicles Industry (SAVI) cluster and Bayanat. Yas Marina.
Apr. 28-29, Riyadh, Saudi Arabia: World Economic Forum Special Meeting. A gathering of investors, politicians and experts on topics of collaboration, growth and energy for economic development. TBC.
Apr. 29-May 1, Riyadh, Saudi Arabia: Future Hospitality Summit. An international gathering hosted in cities around the world bringing together the most influential hospitality investors and developers. Mandarin Oriental Al Faisaliah.
Apr. 29 – May 5, Abu Dhabi, UAE: Abu Dhabi International Book Fair. A key event for the publishing industry in the Middle East and North Africa. Abu Dhabi National Exhibition Center.
Apr. 30-May 1, Abu Dhabi, UAE: Mobility Live. A conference and exhibition sponsored by the Abu Dhabi transport regulators, gathering disruptive technology developers in transportation and the public sector. Abu Dhabi National Exhibition Center.
Apr. 30-May 1, Abu Dhabi, UAE: Middle East Rail. The leading conference in the region for rail innovation, technology and strategy. Abu Dhabi National Exhibition Center.
May 13-15, Abu Dhabi, UAE: Abu Dhabi Global Healthcare Week. A conference focusing on investments, and innovation to solve the most important global health challenges. Abu Dhabi National Exhibition Center and Abu Dhabi City.
May. 14-16, Doha, Qatar: Qatar Economic Forum, Powered by Bloomberg. A news-driven event dedicated to global business and investment. This year’s theme is “A World Remade: Navigating the Year of Uncertainty.” Request your invite here. Fairmont & Raffles, Doha.
May 29-31, Marrakech, Morocco: GITEX Africa. The second edition of the biggest tech and startup gathering in Africa. Place Bab Jdid.