The Daily Circuit
👋 Hello from the Middle East!
Today in The Daily Circuit, we’re looking at the UAE’s quick pace in reaching its oil production capacity, Congressional chatter on the $1.5 billion G42-Microsoft deal, talk of a reorganization at Saudi Arabia’s Public Investment Fund and Qatar’s smart bet on India’s Adani Group. But first, Emirati ambitions to become a hub for Middle East manufacturing.
Gulf governments may be pouring billions into technology’s next wave but old-fashioned industry is still front and center amid the global energy transition from oil. The UAE is courting investors in manufacturing at its third annual Make it in the Emirates Forum, a two-day deal-signing spree in Abu Dhabi that kicked off this morning. The UAE capital will look to build on $32.7 billion worth of procurement agreements and the over 100 deals that were inked at the previous two events.
In 2021 the Arab world’s second-biggest economy rolled out “Operation 300bn,” setting targets to become an industrial center by 2031 and more than double the industry sector’s contribution to the economy over a decade. There are signs of progress: industrial productivity has increased by 18% compared to 2020 and the UAE was ranked first regionally and 29th globally last year in a competitive industrial performance index from the United Nations, climbing seven spots since 2020, The National reports.
This year’s event will emphasize investment opportunities in energy, telecoms, aerospace, healthcare and pharmaceuticals and food and beverage manufacturing. The agenda is focused on Operation 300bn, the use of AI in industries and the Emirates’ goals in aerospace development. Speakers include Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology; Sarah Al Amiri, Minister of State for Public Education and Advanced Technology; Badr Al Olama, Director General of the Abu Dhabi Investment Office; and Faisal Al Bannai, Secretary General of Abu Dhabi’s Advanced Technology Research Council and Advisor to the UAE President for Strategic Research and Advanced Technology Affairs.
📰 Developing Stories
AHEAD OF SCHEDULE
The UAE is likely to achieve its full oil capacity target of 5 million barrels a day more than a year earlier than expected, Bloomberg reports. ADNOC, the state-owned oil company, is on course to reach the threshold by the end of next year or early 2026, which is ahead of the 2027 goal the company had set, according to people with knowledge of the operations. The higher capacity will be a potential source of tension as OPEC+ debates new production quotas later this year, the news agency said. OPEC and its partners have been restricting output for years to shore up the market and raise prices. The UAE – which said this month that it had raised capacity from last year’s level – has been eager to use some of its spare volume, according to Bloomberg. The country has occasionally clashed with Saudi Arabia on the issue, risking a split among the group three years ago, before a compromise was found.
SECOND THOUGHTS
Congressional China hawks are raising red flags over Microsoft’s $1.5 billion investment in Abu Dhabi artificial intelligence firm G42, Politico reports. The deal, brokered with the help of the U.S. Commerce Department, was in part aimed at bringing the UAE – a regional leader in AI development – out of China’s “camp,” Commerce Secretary Gina Raimondo said at the time. Microsoft and G42 are now in initial talks for a follow-on agreement that could include the transfer of cutting-edge U.S.-designed semiconductors to G42. In February, G42 said it is divesting its stakes in Chinese companies and in recent months has “signaled a willingness” to replace hardware made by Huawei and other Chinese vendors with U.S. alternatives, according to Politico. Sen. Marco Rubio (R-Fla.), the ranking member of the Senate Intelligence Committee, said he has “serious concerns that the Biden Commerce Department, under Secretary Raimondo, is not adequately safeguarding our advanced technologies.” On the other hand, Rep. Ritchie Torres (D-N.Y.) hailed the deal and said Congress “should welcome countries who choose to align themselves with the United States,” describing the UAE as a strategic ally and a moderating force in the Middle East.
💲 Sovereign Circuit
Public Investment Fund: The PIF is mulling a reorganization of management to delegate some of Governor Yasir Al-Rumayyan’s responsibilities and is looking to sharpen its investment focus as it scales back some of its mega-projects amid budget shortfalls, Reuters reports. Part of the overhaul also includes reviewing expenditures on consulting firms like BCG and McKinsey. Meanwhile, the Saudi sovereign wealth fund got the green light from regulators over the weekend to acquire Saudi Iron and Steel Co., better known as Hadeed, from the kingdom’s petchems firm SABIC. The deal is expected to close in the second half of the year for an estimated $3.3 billion.
International Holding Co.: The mining business owned by Abu Dhabi conglomerate IHC expects to make $1 billion worth of mining deals this year, IHC CEO Syed Basar Shueb told the Financial Times.
Oman Investment Authority: Companies affiliated with Oman’s sovereign wealth fund, meeting on the sidelines of the COMEX 2024 conference in Muscat, signed more than 30 agreements worth $91 million with companies in the fields of artificial intelligence and data management, including Google, Amazon and Microsoft.
Qatar Investment Authority: A hefty bet on shares in Adani Group is paying off for the QIA, which has more than doubled its gains after buying into the Indian conglomerate at a low in 2023 after U.S. short-seller Hindenburg Research issued a report that was critical of the group. Abu Dhabi’s International Holdings Co. and U.S. GHC Partners are also up big on the company’s U-turn.
↪↩ Closing Circuit
🇯🇵 Tokyo Support: Saudi Arabia’s venture builder BIM Ventures and Japan’s SBI Holdings will launch a $100 million joint investment fund to support start-ups in the kingdom. The agreement was signed at the Saudi Vision 2030 Business Forum in Tokyo over the weekend.
🚁 Air Taxis: Dubai helicopter operator Air Chateau is considering making an investment of $27 million to build infrastructure for the air taxi network it is putting together in the UAE.
🚜 Fertilizer Source: QatarEnergy signed a 15-year contract to supply urea to U.S.-based Koch Fertilizer, a manufacturer and distributor of agricultural products.
👩🍳 First Course: OneOrder, an Egyptian developer of supply chain and logistics solutions for restaurants, raised $16 million in a Series A funding round led by Delivery Hero Ventures.
🛢️ Energy Hunt: Saudi exploration service provider ADES Holding Co. has secured a $645 million deal for six onshore drilling contracts with Kuwait Oil Co.
🏗️ Medical Center: Bymoro, the Moroccan subsidiary of Nigeria’s Bouygues Construction, won the construction contract for the Mohammed VI International University Hospital in Rabat.
🗣 Circuit Chatter
💥 Arms Sales: The Biden administration is expected soon to lift a three-year-old ban on selling offensive weapons to Saudi Arabia, the Financial Times reports.
🚢 Shipping Premium: The cost of international shipping has shot up as businesses prepare to ship goods for the Christmas holiday season far earlier than usual, in a sign of the far-reaching effects of disruption from attacks in the Red Sea, the Financial Times reports.
🔌 Plugging In: Saudi Arabia’s ACWA Power signed preliminary agreements with several Japanese companies on the sidelines of the Saudi-Japan Vision 2030 Business Forum last week.
✈️ Rocky Skies: A Qatar Airways flight from Doha hit severe turbulence over Turkey, injuring 12 people on board, before landing as scheduled in Dublin on Sunday.
👠 Fashion Statement: Saudi Arabia’s fashion industry is set to post a cumulative annual growth of 48% from 2021 to 2025, according to a report by Monsha’at, the government’s Small and Medium Enterprises General Authority.
🌍 Power Circuit
Chinese President Xi Jinping will host Egyptian President Abdel Fattah El-Sisi as well as several other Arab leaders in Beijing this week, its foreign ministry said on Monday. The leaders will “pay state visits to China and attend the opening ceremony of the 10th Ministerial Conference of the China-Arab States Cooperation Forum,” Foreign Ministry spokeswoman Hua Chunying said in a statement. UAE President Sheikh Mohamed bin Zayed is also expected to travel to China this week.
Sheikh Mohamed led the country in offering congratulations to the Al Ain football club after the team overcame Yokohama to win the Asian Champions League final on Saturday, with a 5-1 win on the night, and a 6-3 victory on aggregate.
➿ On the Circuit
Abdulla Al Marri, Minister of Economy and Chairman of Investopia, hosted the first meeting of the Next50 initiative in Abu Dhabi today. The program of Investopia brings together 50 CEOs and executives to promote dialogue and knowledge-sharing among leading companies in the UAE, and stimulate investment in emerging sectors in the private sector. Also in attendance were Hadi Badri, CEO of Economic Development at Dubai Department of Economy; Jean Fares, CEO of Investopia and Trevor McFarlane, CEO of EMIR.
Faisal Al-Mujfel has been appointed Saudi Arabia’s new ambassador to Syria, state news agency SPA reported on Sunday. It is the kingdom’s first envoy to Damascus since the closure of the Saudi embassy there in 2012 during the Syrian civil war.
Elizabeth Churchill, a former Senior Director of User Experience at Google, has been tapped to become Chair of the Human-Computer Interaction Department at the Mohamed bin Zayed University of Artificial Intelligence in Abu Dhabi.
Chris Eby, co-head of asset-management investment banking for Goldman Sachs, was hired by New York-based Blue Owl Capital and will start in September as head of strategy and corporate development, Bloomberg reports.
🎶 Culture Circuit
🍺 Breaking Ground: Building works for the first large-scale licensed brewery and spirits bottling factory in the Gulf region will begin next month in the UAE’s Ras Al Khaimah emirate. Falcon Brews Chief Marketing Officer and Director Leonard Menezes told Zawya Projects that the $65 million project would start with a large commercial brewery with a monthly production capacity of 100,000 cases, as well as a blending and bottling plant. Falcon Brews will cater to the GCC and Africa with Middle East-centric brands. It comes after Craft, the UAE’s first microbrewery, opened in Abu Dhabi in December amid steadily loosening rules around alcohol in the region.
📷 Photo of The Day
🗓️ Circuit Calendar
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.
