The Daily Circuit
👋 Hello from the Middle East!
Today in The Daily Circuit, we’re looking at DXB as 1,500 airline executives pour into Dubai for the annual IATA confab, the abundance of U.S. red tape slowing down Nvidia’s AI chip shipments to the Gulf, Mubadala’s strategy to double down on Asia investments and free Wi-Fi on Qatar Airways flights courtesy of Elon Musk’s Starlink. But first, investors are lining up for Aramco’s coming share sale.
Saudi Aramco’s long-anticipated secondary offering, which could raise as much as $13.1 billion and rank among the most lucrative share sales since the company’s own IPO five years ago, gets underway next week.
The government filed papers on Thursday to start the booking process for investor orders that will lead to the sale of a 0.64% chunk of the world’s largest oil producer on the Tadawul Stock Exchange in Riyadh. Aramco will start taking orders from institutional investors on Sunday, June 2.
State-owned Aramco will earn about $12 billion if it chooses to sell the shares at the top of its indicated pricing range and could add another $1.1 billion by exercising the so-called greenshoe option in the likely event that demand from investors is high.
“The offering provides us with an opportunity to broaden the shareholder base amongst both Saudi and international investors,” Aramco Chief Executive Amin Nasser told reporters on a call after the announcement, Reuters reported. “It also offers us an opportunity to increase liquidity and to increase our global index weighting.”
Selling the shares will provide the kingdom with cash to fuel Crown Prince Mohammed bin Salman’s $1.5 trillion Vision 2030 campaign to diversify the economy amid the global transition from fossil fuels. The government has recently extended the timeline for Neom and some of its mega-projects because of funding shortfalls as oil production cuts have reduced Aramco revenue.
At the top end of the price range, the Aramco deal would be the sixth-largest share sale since the company raised $30 billion in its 2019 initial public offering, Bloomberg reports.
📰 Developing Stories
IN THE AIR
Over 1,500 airline executives will descend on Dubai, the world’s busiest international travel hub, this weekend, for the annual meeting of the International Air Transport Association. The industry trade organization, which represents more than 300 airlines and over 80% of global air traffic, expects to grapple with airline chiefs’ biggest challenges over the three-day gathering. At the top of the agenda are aircraft shortages, geopolitical tensions and carbon reduction strategies as declining airfares spell out a muted outlook for carriers. The 80th IATA Annual General Meeting and World Air Transport Summit, hosted by Emirates Airline, will run from Sunday, June 2 through Tuesday, June 4, and is for the first time taking place in the UAE. Expected to attend are CEOs including Vanessa Hudson of Qantas; Tim Clark of Emirates Airline; Scott Kirby, of United Airlines and Shai Weiss of Virgin Atlantic Airways. Aviation is a linchpin of Dubai’s economic ambitions: the industry contributed 27% to the emirate’s GDP and supported $37 billion in gross value added in 2023. That is projected to increase to $53 billion in 2030, in line with Dubai’s growth forecast, according to Oxford Economics.
CHIP ALERT
The Biden administration has security concerns about the booming demand from the Gulf for AI chips. That’s reflected in a slowdown of issuing licenses to Nvidia Corp. and other chipmakers for large-scale AI accelerator shipments, Bloomberg reports. Officials are particularly focused on high-volume sales as the UAE, Saudi Arabia and Qatar seek to import massive quantities of the chips used in AI data centers, according to the news agency. AI accelerators help data centers process the flood of information needed to develop artificial intelligence chatbots and other tools. In October, the Commerce Department added much of the Middle East to chip export restrictions that originally focused on China and other foreign adversaries. That meant companies now require a special U.S. government license to ship the most advanced semiconductors and chipmaking tools to customers in the Gulf.
💲 Sovereign Circuit
Mubadala: Luca Molinari, the sovereign wealth fund’s Head of Asia and Financial Services, Direct Investments, spoke this week at the JP Morgan Asia Summit in Shanghai. He highlighted the fund’s “commitment to doubling down on investments in Asia by 2030, our focus on continuing to invest in renewable energy and decarbonizing industries, and addressing the opportunities and challenges faced by investors in China,” Mubadala said in an Instagram post.
Abu Dhabi Investment Authority: Germany’s national rail operator Deutsche Bahn has chosen Maersk, DSV, Saudi Arabia’s national shipping carrier Bahri and CVC in consortium with ADIA and GIC to enter the final round of a sale process for its logistics subsidiary Schenker, Reuters reports.
Public Investment Fund: Alphabet’s Google and U.S. augmented reality company Magic Leap, which is majority owned by the PIF, are forming a partnership to build immersive experiences that blend the physical and digital worlds, the companies shared on Thursday.
↪↩ Closing Circuit
🤖 Chinese Challenger: Prosperity7, a unit of Saudi Aramco’s venture capital fund Aramco Ventures, participated in a $400 million funding round of China’s most prominent generative artificial intelligence start-up, Zhipu AI. The deal values the Chinese group at about $3 billion, the Financial Times reported.
☁️ African Cloud: Oracle said it plans to open two new data centers in Morocco – one in Casablanca and the other in the southern city of Settat – opening new cloud locations in the growing North Africa IT ecosystem.
🪟 Smart Glass: Gauzy, an Israeli nanotech startup that makes smart glass films, set the terms for its IPO, seeking a valuation of $357 million when it starts trading on the Nasdaq next month.
✈️ Profit Turnaround: El Al Israel Airlines reported record revenue in first quarter of 2024 and net income of $80.5 million, compared to a $34.4 million loss in the same period last year. Many international airlines have stopped flying to Israel since the war in Gaza.
🗣 Circuit Chatter
✨ Gold Rush: The UAE has been accused in a comprehensive report by the NGO Swissaid of being a leading recipient of tens of billions of dollars worth of gold smuggled out of Africa every year, followed by Switzerland and India, the Financial Times reports. A UAE official acknowledged to the newspaper that there have been “concerns around gold smuggling into Dubai,” but said the country had “implemented detailed new regulations for gold and precious metals to mitigate these risks effectively.”
🌐 Wi-Fi Fleet: Qatar Airways said it will collaborate with Elon Musk’s SpaceX and Starlink to provide free Wi-Fi to its passengers, starting by the end of 2024 on three Boeing 777-300 aircraft and eventually across its entire fleet.
🇪🇬 Steel Factory: Egypt’s cabinet approved plans to establish a new steel manufacturer in the Suez governorate called Suez Steel Co. and a new manufacturing company for agricultural crops in Sadat City.
🛫 Airport Shift: Dubai is looking to add more airline capacity and is betting on a new visa that facilitates return trips to attract more visitors, as it shifts its focus from serving as a transfer hub and short-term destination, Bloomberg reports.
🤖 New LLM: Mohamed bin Zayed University for Artificial Intelligence launched a new open large language model known as K2-65B, which, according to its developers, sets new standards in transparency and performance for open-source artificial intelligence.
🌍 Power Circuit
UAE President Sheikh Mohamed bin Zayed departed Beijing on Friday, concluding his two-day state visit to China. During the visit, he was joined by a large delegation of UAE leaders that included Sheikh Hazza bin Zayed, Deputy Ruler of Abu Dhabi; Khaldoon Al Mubarak, Chairman of the Executive Affairs Authority and CEO of Mubadala Investment Co.; Suhail Mohamed Al Mazrouei, Minister of Energy and Infrastructure; Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology and COP28 President; Mohamed Hassan Alsuwaidi, Minister of Investment; Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade and Faisal Al Bannai, Adviser to the President for Strategic Research and Advanced Technology Affairs.
Sheikh Nahyan bin Mubarak, the UAE Minister for Tolerance and Coexistence, led the official opening of Abu Dhabi’s $1.3 billion Reem Mall. While touring the 400-store commercial center, Sheikh Nahyan stopped in at “Snow Abu Dhabi,” the region’s largest snow park, which features attractions that include sledding, carousels, zorbing and zip-lining. Among others attending the opening were Jamal Al Ghunaim, Ambassador of Kuwait to the UAE; Reem Mall’s developer, Faisal Jamil Sultan Al-Essa, Chairman of mall developer Al Farwaniya Property Developments and Al Farwaniya’s Vice Chairperson Nadia Akil; Tarek Sultan, Chairman of Al Farwaniya shareholder Agility Global; and Badr Al Olama, Acting Director General of ADIO, the Abu Dhabi Investment Office.
➿ On the Circuit
Jamie Dimon, CEO of JPMorgan Chase, among the many financial institutions expanding its reach in the Gulf, emphasized that former U.S. President Donald Trump had 74 million people vote for him in 2020 and said that was deserving of respect, speaking at a gathering of JPMorgan Chase & Co. alumni at the Morgan Library & Museum in Manhattan Thursday night just hours after Trump’s guilty verdict in a New York court, Bloomberg reports.
Todd Boehly, co-owner of Chelsea FC might sell his stake in the U.K. football club, ESPN writer Gabriele Marcotti said on his “Gab and Juls Show” podcast.
Amer Malik, Head of Middle East International at Lombard Odier, warned that a lack of financial planning among high-net-worth expats in the UAE could have harsh consequences. According to the consultancy’s 2024 UAE Expat Study, 61% of wealthy expats surveyed have not made any tax or estate planning arrangements for their children living abroad, putting their wealth transfer at risk.
🎶 Culture Circuit
🦕 Exit through Gift Shop: Museum professionals will gather in Riyadh this weekend to talk shop and compete for a trip to tour London’s famous museums. The International Conference on Education and Innovation in Museums, hosted by Saudi Arabia’s Museums Commission, aims to explore design, innovation and ways to enhance visitor engagement. It comes amid a boom in development of new museums in the Gulf and wider Middle East, including Abu Dhabi’s Saadiyat Cultural District, where construction of the Guggenheim Abu Dhabi, Zayed National Museum and The Natural History Museum Abu Dhabi are nearing completion. Final preparations are also underway in Cairo for the much-anticipated opening of the Grand Egyptian Museum.
📷 Photo of The Day
🗓️ Circuit Calendar
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 16-18, Across MENA: Eid Al Adha. Government offices and businesses are closed across the MENA region for the Islamic holiday. Dates are subject to sighting of the moon by state religious committees in each country.
June 22-23, New York City: Mubadala New York Sail Grand Prix. Flying catamarans compete at SailGP’s two-day racing festival in New York Harbor. Governors Island.
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.
July 15-26, Granada, Spain: ADIA Lab International Summer School. A course of lectures and case studies to explore the critical role of trust and safety in AI, examining the ethical, technical and societal implications of AI applications. University of Granada.
