👋 Hello from the Middle East!

Today in The Daily Circuit, we’re looking at UAE power player Sheikh Tahnoon’s pilgrimage to Microsoft HQ, Alef Education’s oversubscribed IPO, Mubadala’s acquisition of the Starbucks franchise in Brazil and a third cohort of graduates from the Abu Dhabi university dedicated to AI. But first, pricing slumps in Aramco’s offering.

While Saudi Arabia’s impending sale of a second chunk of shares in Aramco looks like it will be among the world’s biggest stock offerings in years, the deal is falling slightly shy of expectations.

After almost a week of marketing the sale in London, New York and other financial capitals, the kingdom’s bankers told investors they plan to price shares of the world’s biggest oil company at 27.25 Saudi riyals ($7.27) each, the Wall Street Journal reports. That compares to the target range of 26.70 to 29 riyals and means the offering should yield $11.2 billion rather than the $12 billion previously mooted.

The reduced bounty could mean more budget tightening for some of the country’s mega-projects, such as Neom, that the offering is meant to finance, especially as oil prices slide below $80 a barrel. Sustaining the ambitious pace of construction envisioned by Saudi Crown Prince Mohammed bin Salman would require crude oil prices closer to $100 a barrel, according to calculations by the International Monetary Fund cited by Bloomberg.

Among the stock offering’s attractions for investors are the steady and increasing dividend payouts Aramco offers relative to its global oil competitors. The company carries a dividend yield of close to 7%, higher than the 3.4% at Exxon and 4.2% at Chevron, the Journal notes.

📰 Developing Stories

ROAD WARRIOR

UAE National Security Advisor Sheikh Tahnoon bin Zayed, who also chairs Abu Dhabi artificial intelligence firm G42, headed for Microsoft’s headquarters in Redmond, Wash., following a three-day state visit to Washington, D.C. He met with CEO Satya Nadella on Thursday to discuss “ways to strengthen collaboration,” according to a post on X. Microsoft, the biggest backer and partner of generative AI market leader OpenAI, made a $1.5 billion investment in G42 in April. The deal brought Abu Dhabi’s AI champion into the fold of American companies leading tech’s big wave. The investment required G42 to sever its ties with Chinese manufacturers like Huawei. Sheikh Tahnoon, who also chairs two Abu Dhabi sovereign wealth funds – Abu Dhabi Investment Authority and ADQ – is now working on behalf of the UAE to finalize a data protection and intellectual property agreement with the U.S. The aim is to assuage fears over national security as the trade relationship increasingly funnels investments to machine learning, semiconductors and aerospace. 

BOOK SMART

Alef Education delivered a promising IPO, the first of the year for Abu Dhabi’s ADX, pricing the education technology platform at the top of the range and drawing $20 billion in orders. The offering was 39 times oversubscribed and raised a total AED 1.89 billion ($515 million) after the deal priced shares at 1.35 dirhams each, implying a market capitalization of $2.6 billion. Alef, founded in 2016 and indirectly owned by private asset manager Abu Dhabi Capital Group, makes online learning programs for K through 12 students, with customers in the UAE, Morocco, Indonesia and the U.S. Shares are expected to be listed on June 12 under the ticker symbol “AlefEdT.”

💲 Sovereign Circuit

Mubadala: Brazilian restaurant chain operator Zamp, which is backed by Mubadala, has agreed to buy the rights to operate the Starbucks brand and some stores in the South American country from bankrupt SouthRock for $23 million, Bloomberg reports. The Abu Dhabi sovereign wealth fund’s Mubadala Energy unit collaborated with Indonesia’s Kotabaru Environment Agency to plant 10,000 mangrove seedlings in the area of Tanjung Pangga Village to help protect the coastal ecosystem and preserve biodiversity.

Qatar Investment Authority: The sovereign wealth fund is eyeing expansion in Japan, according to Head of the QIA advisory, Asia Pacific Abdulla Ali Al Kuwari. The QIA’s investments in Japan have more than doubled since opening an office in Singapore in 2021. So far, QIA has invested nearly $646 million in Japan, including a 5% stake in semiconductor manufacturer Kokusai Electric, valued at $320.6 million. Semiconductors, manufacturing and real estate are among the top investment priorities.

Public Investment Fund: The fate of a deal between PIF-owned LIV Golf and the PGA Tour is examined by The Athletic, one year after the two sides agreed to work together. Under the proposed agreement, the Saudi sovereign wealth fund would pour billions into the American tour and PIF governor Yasir Al-Rumayyan would be chairman of a newly formed entity with a seat on the policy board. PGA Tour Commissioner Jay Monahan would be CEO of the venture and have control over LIV’s future – a point of contention for the kingdom, which is pushing a more globalized vision for the game of golf. 

↪↩ Closing Circuit

⛽ Pipeline Building: A unit of China’s Sinopec signed a $1.1 billion deal to build natural gas pipelines for Saudi Aramco and the third phase of its Master Gas System in Saudi Arabia.

💻 Trend Capitalizing: Dubai and London fintech start-up Elevate has secured $5 million in new funding to scale its operations and capitalize on growing numbers of remote workers and freelancers.

☁️ Cloud Guardian: U.S. cloud security company Tenable signed an agreement to acquire Israeli cyber startup Eureka for an undisclosed price.

🗣 Circuit Chatter

✈️ Body Shopping: Saudia is in talks with Airbus and Boeing over orders for wide-body jets as the planemakers face constraints in producing narrow-body aircraft, Reuters reports.

🪪 Single Ticket: The Abu Dhabi Department of Economic Development launched its new Unified Economic Licence, which is designed to streamline registration and other required procedures for companies that operate in the emirate and its free zones.

🛩️ Top in Transport: The UAE ranked No. 1 in quality of air transport infrastructure, according to the World Economic Forum’s recently launched Travel & Tourism Development Index 2024.

💰Clan Wealth: Ultra-rich families worth more than $150 billion are helping to drive a resurgence in private equity buyouts and fueling some of the year’s biggest acquisitions, Bloomberg reports.

💡 Startup Support: The legacy Dubai Expo site is now home to a non-government foundation to support female tech entrepreneurs from the region and the Global South and assist start-ups that aim to tackle social and environmental challenges through grantmaking and in-kind support. The Expo City Dubai Foundation was launched at an event in the Women’s Pavilion at Expo City Dubai on Thursday. 

🌍 Power Circuit

Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, attended the commencement of the Mohamed Bin Zayed University of Artificial Intelligence’s third graduating class on Thursday. He was joined onstage by Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Chairman of MBZUAI, and Dr. Eric Xing, MBZUAI President, as the 101 graduates accepted their diplomas. “You don’t just have a front-row seat to history, you will play a primary role in shaping it,” Al Jaber said in a speech.

Saudi Oil Minister Prince Abdulaziz bin Salman said the kingdom will increase its oil production capacity from 2025 to 2027, before going back to the current level of 12.3 million barrels per day in 2028, speaking at the International Economic Forum in St. Petersburg. “To increase the capacity over the years, you need to have a clear path on how you produce these volumes,” he said.

➿ On the Circuit

OPEC Secretary General Haitham Al Ghais defended recent adjustments to the deal agreed upon this week limiting OPEC+ oil production output, calling it a success. Speaking at the St. Petersburg forum, Al Ghais expressed optimism about continued strong oil demand, citing a rebound in travel, Reuters reports.

Qatari Minister of Transport Jassim Al Sulaiti traveled to Zhengzhou, China, to meet Tang Yuxiang, Chairman of Yutong Bus Co., which has one of the world’s largest e-bus factories.

🎶 Culture Circuit

🎨 Under the Hammer: Highlights from the art collection of the late Dr. Mohammed Said Farsi, the former mayor of Jeddah who died in 2019, are set to dominate the Summer Fine Art auction by Sloan Street Auctions in London on June 12, Arab News reports. Among the works in the eclectic and far-reaching collection are a lithograph from David Hockney’s “Swimming Pool” series and works by pioneering artists from the Middle East, including Mohamed Nagy, Abdul Hazi El-Gazzar and Seif Wanly.

📷 Photo of the Day

🗓️ Circuit Calendar

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 throughout the 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.