The Daily Circuit: Gulf swoons for proptech + Cairo’s chocolate factory

👋 Hello from the Middle East!

Today in The Daily Circuit, we’re looking at IHC’s efforts to revive its stalled shares, Goldman Sachs’ new regional HQ in Riyadh, a Texas showdown for LIV Golf and Egypt’s expanding Mars chocolate factory near the Great Sphinx. But first, tech finds its niche in the exploding Gulf real estate market.

Proptech is having a moment in the Middle East. A flurry of deals among some of the biggest property technology players in the region amid a glut of real estate development projects in the Gulf has prompted capital data platform Magnitt to ponder: Is this a proptech bubble? 

Saudi Arabia and the UAE in particular are driving the action. The total value of real estate projects currently planned or under construction stands at an estimated $1.68 trillion, up from $1.38 trillion a year earlier, according to commercial real estate firm CBRE. Saudi Arabia accounts for 63.1% of the total or some $1.06 trillion, followed by the UAE, which at $409 billion, accounts for 24.4% of the total.

This week Dubai-based property marketplace startup Huspy announced a new funding round led by London VC firm Balderton Capital – with participation from Fifth Wall at a higher valuation than its Series A in 2022 – bucking a broader trend of downward value corrections. Huspy, which has offices in Madrid, is planning a European expansion and a mobile app with more features. Property Finder, another Dubai-based property portal, closed a $90 million buyback deal with Francisco Partners earlier this month, allowing original backer BECO Capital to exit with the Dubai property portal valued at more than $1 billion, according to Founder Michael Lahyani. 

Proptech up-and-comers have also closed deals: UAE-based rent-now-pay-later platform Keyper raised $4 million in a pre-Series A round and received $30 million in sukuk financing. And Egypt’s Birdnest, a startup that develops technology for real estate investors, announced the close of a pre-Series A funding round led by Beltone Venture Capital and CI Venture Capital.

Still, startups take off from a low base of funding deals and smaller check sizes amid the global downturn in venture capital activity. Real estate venture funding in the Middle East, Pakistan and Turkey dropped 78% year-on-year in 2023, according to Magnitt. “There’s definitely energy in the region for proptech investments, but whether the VC space will reflect the broader industry growth remains to be seen,” Magnitt CEO Philip Bahoshy wrote in a note today. 

📰 Developing Stories

STALLED STOCK

International Holding Co., the $240 billion conglomerate that grew out of an obscure Emirati fish farming business, is seeking to reward shareholders as the company’s phenomenal growth spurt has stalled. The Abu Dhabi-based firm, led by Sheikh Tahnoon Bin Zayed, brother of the UAE’s President, is making plans for a $1.4 billion buyback program aimed at reviving its stock price to “create significant value in the future,” CEO Syed Basar Shueb tells Bloomberg. Between 2019 and 2022, IHC shares on the Abu Dhabi Securities Exchange rocketed 43,000%. Over the past two years, however, they’ve leveled off and hovered around the level of 400 dirhams. IHC announced the buyback program May 6 and plans to execute the plan over a one-year period, pending approval from investors and regulators. “This is our strategy for rewarding our shareholders,” Shueb said.

MIDEAST MUNCHIES

Mars Bars, the gooey chocolate candy sold virtually everywhere on Earth, are finding the MENA market to be a sweet spot for sales growth. Counting on both kids and adult snackers to keep devouring the high-calorie munchies, Mars Egypt – the Middle East subsidiary of McClean, Virginia.-based Mars Inc. – laid out plans this week to invest $250 million in expanding its Cairo-area factory near the pyramids in Giza. Over the course of an 18-month construction period, the plant’s production capacity is slated to increase from 25,000 to 40,000 tons a year. Alongside the caramel-infused chocolate bars, Mars currently makes roughly 150 products on the Egyptian factory’s six production lines, including Snickers, Altoids and Juicy Fruit. The expansion will add two new production lines and 15 new products by the start of next year, the plant’s director, Osama Hellal, told the Zawya news agency on a factory tour. Mars Egypt exports to over 40 countries in Africa, the Mideast, Europe and Australia.

💲 Sovereign Circuit

Public Investment Fund: Saudi mining company Ma’aden, owned by the PIF, has successfully extracted lithium – a key element in electric vehicle batteries – from seawater, although not at levels that are commercially viable and its project remains at the pilot stage, Reuters reports. Meanwhile, LIV Golf, the PGA rival backed by Saudi Arabia’s sovereign wealth fund, announced that the league’s championship will take place Sept. 20-22 at the Maridoe Golf Club in North Texas. 

Oman Investment Authority: President of Oman’s sovereign wealth fund, Abdulsalam Murshidi, signed a preliminary agreement on Thursday with Jordan’s Social Security Investment Fund CEO Ezzeddine Kanakrieh to increase joint investment in promising target sectors in both countries and to establish a Jordanian-Omani company.

↪↩ Closing Circuit

🏦 MENA-Centered: Shorooq Partners, an Abu Dhabi-based investment manager focused on MENA tech companies, announced the initial close of its second private credit fund. A unit of South Korea’s IMM Investment Corp. is a minority partner in the $100 million fund.

🚚 Delivery Hub: DHL Express has opened a $48 million logistics center at Abu Dhabi’s Zayed International Airport that aims to streamline importing, exporting, and regional distribution.

⚓ Autonomous Ships: Orca AI, a London-based startup founded by Israeli naval engineers that is developing software for autonomous shipping vessels, raised $23 million in a funding round led by OCV Partners and MizMaa Ventures.

☁️ Cloud Efficiency: Finout, an Israeli startup that helps companies optimize spending on cloud services, raised $26 million in a Series B financing round led by Red Dot Capital.

🛰️ Space Tech: French defense and technology conglomerate Thales has acquired Israeli satellite startup Get SAT for an undisclosed price, Breaking Defense reports.

🗣 Circuit Chatter

🌍 Regional HQ: Goldman Sachs received a license from Saudi Arabia to set up its regional headquarters in Riyadh after becoming the first Wall Street bank to comply with new rules requiring that foreign firms base their Mideast operations in the kingdom, Bloomberg reports.

⛽ Pumping Gas: The Egyptian government has received seven offers from local and international companies to acquire state-owned fuel retailer Wataniya and is considering which to select, Asharq Business reports, citing an interview with Minister of Planning and Economic Development Hala Elsaid.

🚢 Saudi Ships: Italy’s Fincantieri, which formed a joint shipbuilding venture this week with UAE defense conglomerate EDGE Group, announced on Thursday it has established a new subsidiary in Saudi Arabia to work with local partners on ship construction, maritime equipment and naval logistics services.

🚦Speed Trap: The Qatari government plans to stop anyone with outstanding traffic fines from leaving the country without paying up, starting Sept. 1. It also announced a limited amnesty program, cutting fines in half if they’re paid before September.

🌍 Power Circuit

UAE President Sheikh Mohamed bin Zayed will go on a state visit to China on May 30 following an invitation from Chinese President Xi Jinping. The trip will mark the 40th anniversary of the establishment of diplomatic relations and build on a Comprehensive Strategic Partnership agreement established in 2018. The UAE will invest $10 billion in high-growth sectors in Pakistan following a meeting between Sheikh Mohamed and Muhammad Shehbaz Sharif, Prime Minister of Pakistan, on Friday at Qasr Al Shati in Abu Dhabi.

Sheikh Nahyan bin Mubarak, the UAE’s Minister of Tolerance and Coexistence, inaugurated the American Community School of Abu Dhabi’s new Saadiyat Island campus on Thursday. Guests at the ceremony included U.S. Ambassador to the UAE Martina Strong; UAE Assistant Minister of Political Affairs Lana Nusseibeh; and Abu Dhabi Pension Fund Managing Director Salem Alnuaimi.

➿ On the Circuit

Abdulla Al Marri, UAE Minister of Economy, held a meeting with Eric Adams, Mayor of New York City on the sidelines of his visit to the U.S., to discuss collaboration in fintech, clean energy, entrepreneurship, tourism, transport and the circular economy.

Hana Al Rostamani, Group CEO of First Abu Dhabi Bank,was guest-of-honor at a lunch hosted by ​the U.S.-U.A.E. Business Council on Thursday at Cafe Milano in Washington, D.C. Al Rostamani, who is also Co-Chair of the Business Council’s Board of Directors, was joined by executives from U.S. tech, energy and infrastructure companies as well as experts from some of Washington’s top think tanks. Al Rostamani and members of the FAB team are visiting New York City and Washington, where the UAE’s largest bank has its U.S. headquarters. 

Khalid Al Falih, Saudi Arabian Minister of Investment, led a round table on digital entertainment in Tokyo, Japan, as part of the Saudi Arabia-Japan Vision 2030 Business Forum. Delegates from Saudi Arabia and Japan, including Abdullah Alswaha from the Saudi Ministry of Communications and Information Technology, were also in attendance. 

Microsoft President Brad Smith said in an interview with Reuters that the tech company’s $1.5 billion deal with the UAE artificial intelligence firm G42 may eventually involve the transfer of sophisticated chips and tools – a move that Republican congressional leaders warn could have sensitive national security implications.

🎶 Culture Circuit

🎙️ Floating Masterpiece: Dubai has unveiled a dazzling new floating theater, the Azizi Venice Opera House, a 2,000-seat gold-clad structure to be surrounded by a crystal lagoon. The venue is expected to attract an array of international ballets, concerts, operas and musicals to Dubai.

👙 Bikini Kingdom: Saudi Arabia’s first swimsuit fashion show, held during the inaugural Red Sea Fashion Week at the St. Regis in the Ummahat Islands last week, is garnering attention on social media. The event marked a notable milestone in the rapid cultural shift in the kingdom as social norms have relaxed in recent years. 

📷 Photo of The Day

🗓️ Circuit Calendar

May 18-26, Abu Dhabi, UAE. Abu Dhabi Comedy Week. Standup comics Dave Chapelle, Aziz Ansari, Bassem Yousef and Chris Tucker headline the first annual festival. Etihad Arena.

May 25-26, Dubai, UAE. Summer Blessings. Dubai festival celebrates the palm tree as the UAE’s national icon with live performances, date-themed events and artisan marketplace. Shindagha Museum.

May 27-28, Abu Dhabi, UAE: Make It In The Emirates Forum. Organized by the Ministry of Industry and Advanced Technology in collaboration with the Abu Dhabi Department of Economic Development and ADNOC, the forum offers a networking and knowledge exchange platform for the industrial community, both locally and internationally. Abu Dhabi Energy Center.

May 29-31, Marrakech, Morocco: GITEX Africa. The second edition of the biggest tech and startup gathering in Africa. Place Bab Jdid. 

June 2, Muscat, Oman: Taiwan Trade Mission to Oman. Taiwan trade officials invite Omani investors and entrepreneurs for one-on-one meetings at conference. Crowne Plaza Muscat.

June 5, Hong Kong: Bloomberg Wealth Event. A gathering to bring actionable intelligence to portfolio managers and other dealmakers and analysts from asset managers and owners, family offices and hedge funds. Conrad Hong Kong. 

June 11-13, Rio de Janeiro, Brazil: Future Investment Initiative Priority Summit. Saudi Public Investment Fund holds FII conference for first time in Latin America. Copacabana Palace.

June 23-26, National Harbor, Maryland: SelectUSA Investment Summit. The highest profile event in the U.S. to facilitate business investment by connecting thousands of investors, companies, economic development organizations and industry experts to make deals. Gaylord National Resort and Convention Center.