Dubai installs Chief AI Officers across government departments

The C-suites have gotten a bit bigger in Dubai’s government offices.

Over the weekend, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, installed 22 Chief Artificial Intelligence Officers across departments that govern areas such as community development, human resources, customs, policing and civil aviation. 

“The appointment of the new Chief AI Officers in the Dubai government marks the initial phase toward realizing our vision for the future of government work,” Sheikh Hamdan said. “We are confident that these officers will intensify their efforts and go the extra mile in translating our vision into reality.”

It is a quintessentially Dubai move. The UAE’s biggest city has long sought to be known for flexible policymaking, a business-friendly environment and smart government services as it looks to lure private sector development, with the likes of Microsoft, Meta and Google taking up regional headquarters in the glitzy city.

The Dubai Future Foundation, which shares an office tower with UAE Prime Minister and Ruler of Dubai Sheikh Mohammed Al Maktoum, for example, is a think tank designed to help guide government policy as it gears for the future. 

While Dubai has prioritized business-friendliness and agile governance amid the artificial intelligence revolution, Abu Dhabi has taken a different tact.

The UAE capital, a bit more than an hour south of Dubai, has leveraged its deep sovereign wealth fund pockets to plow cash into government-backed entities, investment vehicles and startups both at home and abroad.

Locally, this has yielded AI champion G42, the applied research group Advanced Technology Research Council and an AI-dedicated research university, the Mohamed bin Zayed University of Artificial Intelligence.

It has also given Abu Dhabi Inc. a footprint in tech hubs like Silicon Valley, with major investments in companies like semiconductor startup Cerebras and self-driving firm Waymo.   

UAE foreign assets pegged at $2.5 trillion by investment chief

A new interview with the UAE’s foreign investment chief puts the country’s current assets abroad, both government and private, at an estimated $2.5 trillion.

Jamal Bin Saif Al Jarwan, Secretary-General of the UAE International Investors Council (UAEIIC), also told the Emirates New Agency WAM that the portfolio is doing well despite economic headwinds.

The UAE’s international investment footprint is topped by sovereign wealth funds holding 72% of the assets, Al Jarwan noted.

Abu Dhabi Investment Authority (ADIA) is the leading foreign investor, followed by Mubadala Investment Co., Investment Corporation of Dubai, Emirates Investment Authority and ADQ.

All told, the UAE owns seven sovereign wealth funds with assets exceeding $2 trillion, trailed by government-owned and quasi-governmental companies with 18%, UAE banks with 2.5% and 7.5% originating from family-owned and private companies.

The “most prominent” deal in 2023 was between U.S. private equity firm Apollo and ADIA to acquire chemicals manufacturer UniVar for $8.1 billion, he said.

Dubai’s Parkin IPO surges amid Gulf privatization push

As of this morning, Dubai has IPO’d six out of the 10 government entities it plans to take private as the emirate looks to boost trading volumes on its stock exchange and join the capital markets action picking up speed in Abu Dhabi and Riyadh. 

The Dubai public parking company, Parkin, debuted on the DFM today with a 31% surge in its stock price. Parkin’s $429 million IPO was 165 times covered and attracted $71 billion in orders – a record for Dubai. The company pitched to shareholders a growth story on the back of Dubai’s population boom: it forecasts demand for public parking to grow by 60% by 2033, Bloomberg reports. 

Strong post-listing performance is becoming a signature of the region’s companies – returning an average of 40% to investors – and spurring international interest in IPOs here. Strong investor demand has been bolstered by government reforms, particularly in the UAE and Saudi Arabia, amid a privatization push. 

Nearly 30 IPOs are expected in the Gulf this year. Two of the region’s biggest grocers are in line: Lulu Group is reportedly eyeing a $1 billion dual listing in Abu Dhabi and Riyadh. Spinneys Dubai, the franchisee of the supermarket chain in the UAE and Oman, is also expected to go public in 2024. No word yet on what the Dubai government may sell off next.

Qatar makes bid for young tech firms ahead of Web Summit

As Qatar prepares to host next week’s Web Summit extravaganza, government planners are trying to attract early-stage tech companies to set up shop in the country.

One of those efforts, Startup Qatar, was rolled out on Wednesday, offering free visas, tax waivers, licenses, office space and funding to promising tech firms.

All the services are described and accessible through the campaign’s website and will be promoted heavily at Web Summit Qatar.

The conference, which opens Feb. 26 at the Doha Exhibition and Convention Centre, expects more than 1,100 startups from 80 countries. Tickets are already sold out.

Will Saudi Arabia’s plan work to become the Middle East’s new corporate HQ?

The deadline has passed for international companies vying for big contracts with Saudi Arabia to relocate their corporate headquarters to the kingdom. 

From Jan. 1, government-backed entities are restricted from doing business with large foreign firms that don’t have regional headquarters in the country, as Saudi Arabia looks to diversify its economy away from oil. Ultimately, the kingdom is squaring off with the UAE, which has long held the majority of regional headquarters and attracted the lion’s share of corporate expenditure and foreign investment. 

“A superficial nameplate saying ‘this is the regional headquarters’ will not fly,” Saudi Arabia’s Minister of Investment Khalid Al-Falih said back in 2021, when the mandate was first announced. The expectation is that businesses will employ executive-level staff and oversee operations in other Middle East countries from their kingdom-based offices.

By October 2021, 44 companies had received government licenses to set up headquarters in the country. The companies that had already relocated their regional headquarters included PepsiCo, DiDi, Unilever, Siemens, KPMG, Novartis, Baker Hughes, Halliburton, Philips, Schlumberger, SAP, PwC, Oyo, Boston Scientific and Tim Hortons. Since then, a total of 200 have been granted licenses for regional HQs. 

In tandem with the corporate push, quality of life is becoming a larger emphasis for the kingdom. In 2016 the religious police was tamped down. Two years later, an investment initiative was launched to rapidly develop more cultural, entertainment, sports and tourism activities, which was quickly followed by opening up to global tourism and a broader acceptance of Western dress in corporate settings. Women’s workforce participation has also gone up, from 18% in 2009 to 30% in 2020, according to the Atlantic Council.

Saudi Arabia is now aiming to lure 480 companies to open regional HQs by 2030. For context, as of 2021, 196 of the Fortune 500 had a dedicated office for the Middle East and Africa to service the region, with 70% opting to locate in Dubai. 

Analysts and recruitment experts predict executives are scrutinizing the policy for loopholes.

The feeling among those already doing business in the region is “we’re going to try and get around it in some way, shape or form,” Oscar Orellana-Hyder, co-founder of Cordell Partners, a financial services headhunting firm based in the UAE, told The Circuit. 

“The decision on where to locate a headquarters also depends on who the anchor investor is in a firm, the amount invested and what type of capital has been raised from the region,” he added. 

The move comes at a time when the region’s sovereign wealth funds are writing bigger checks and becoming more strategic in their investment decisions – with more strings attached. 

Three sovereign wealth funds from the UAE invested a combined $36.5 billion in 2023, according to Global SWF, which tracks the world’s sovereign investment funds. Abu Dhabi’s Mubadala was ranked third in the top 10 list of SWFs with investments of $17.5 billion, followed by Abu Dhabi Investment Authority (ADIA) with $13.2 billion. 

Qatar Investment Authority (QIA) was ranked seventh at $5.9 billion. Abu Dhabi’s ADQ took the eighth spot with investments of $5.8 billion.

But it is Saudi Arabia’s Public Investment Fund, known as the PIF, that is the world’s most active and prolific: it was the leading sovereign investor in 2023 with $31.5 billion deployed in 48 deals, a 33% increase over 2022.

“If you’re pitching to the PIF, and if you’re pitching to other parts of Saudi Inc. then it’s all about this commitment piece,” Orellana-Hyder said. “Commitment has to flow both ways.”

The Weekly Circuit: Prepping for COP28 + Saudi cybersecurity

👋 Hello from the Middle East!

With the U.N. global climate summit just four weeks away, some 70 government ministers from around the world, including U.S. Special Envoy for Climate John Kerry, convened in Abu Dhabi this week for final discussions ahead of the annual gathering.

The president-designate for the COP28 conference, Sultan Al Jaber, who is also head of the Abu Dhabi National Oil Co. and its renewables arm, said on Monday that he understands countries have strong views on whether or not to include fossil fuels in the summit’s negotiated pact. Burning coal, oil and gas is a main contributor to climate change, but so far a timeline for reduction has been left out of all U.N. climate agreements, which have been negotiated annually for nearly three decades.  

The energy executive has previously called the drawdown of oil and gas “inevitable” and this morning asked for compromise at the upcoming meeting: “I need you to work together to come forward with solutions that can achieve alignment, common ground and consensus between all parties,” Al Jaber told the Pre-COP28 Meeting.

A tripling of renewable energy by 2030 is expected to be the marquee target set at the upcoming COP28. The Group of 20 nations, including  China, the U.S. and India, agreed in September to pursue the aim. But leaders, particularly in Europe, argue that will not be enough and must be paired with a phase-out of fossil fuels – a sticking point for oil and gas-reliant economies. “You cannot just have the renewables goal and then call the COP a success,” European Union Climate Policy Chief Wopke Hoekstra told an event in Brussels on Friday.

The preparatory talks are the last formal meeting before COP28 and are seen as a crucial opportunity to outline keeping the 1.5ºC threshold within reach and resolving how a loss and damage fund will be financed. Also on the agenda: the “global stocktake” at COP28, an assessment of where countries stand in meeting the goals of the 2015 Paris Agreement.

Welcome to The Weekly Circuit. Read on for the stories, deals and players driving the news across the MENA business landscape. Please send comments and story tips to [email protected].

CYBER RISKS

Aramco CEO calls for ‘international standards’ on AI

The head of Saudi Aramco called for an international set of rules to govern artificial intelligence and protect businesses from security breaches. CEO Amin Nasser told a packed hall today at the Global Cybersecurity Forum in Riyadh he believes in “international standards that can keep pace with the rapid development of AI,” The Circuit’s Kelsey Warner reports.

Ramping up: The stakes are high. Aramco was the victim of one of the biggest cyber attacks in the internet era in 2012 that threatened to shut off 10% of global oil supply. On Wednesday, Aramco’s venture capital arm, Wa’ed Ventures, invested in SpiderSilk, a UAE startup that offers AI-powered cybersecurity services. The $500 million fund led the $9 million round and signed a collaborative agreement as the state-oil business – and world’s No. 3 most valuable company – pushes to ramp up its cybersecurity offerings.

Decisive week: The Riyadh forum is being held against a backdrop of massive global interest in how the development of artificial intelligence will be governed and the direction of AI regulation starting to take shape. Technology leaders are reacting to an executive order from the Biden administration earlier this week, one of the farthest-reaching policies on the use of artificial intelligence ever set out. In a decisive week for the future of online safety, the forum in Riyadh is the Arab world’s part of the conversation. 

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BUY NOW, PAY LATER

Gulf locks in its own fintech unicorn with Tabby payment platform

Bucking a global trend of valuation corrections, the Gulf has its first fintech unicorn with Tabby. The Saudi “buy now, pay later” (BNPL) startup has been valued at $1.5 billion after raising $200 million in a series D funding round as it prepares to go public on the kingdom’s stock exchange, The Circuit’s Kelsey Warner reports.

Raising funds: U.S.-based Wellington Management led the round, with participation from Hong Kong’s Blue Pool Capital and existing investors Abu Dhabi sovereign wealth fund Mubadala Investment Capital, Saudi Arabia’s STV Ventures, PayPal Ventures and Hong Kong’s Arbor Ventures.

IPO-Ready: Tabby, founded in Dubai in 2019, relocated to the Saudi capital of Riyadh in September as part of plans to list on the Tadawul stock market. The company manages over $6 billion in annual transaction volume and has 10 million users across Saudi Arabia, the UAE and Kuwait. The platform works with over 30,000 brands, including 10 of the largest retail groups in the MENA region as well as Amazon, H&M and SHEIN. 

Jostling rivals: BNPL is a kind of short-term financing that lets online shoppers make purchases and pay for them in installments, with companies integrating their payment platform into e-commerce sites, an offering that has taken off in the Middle East with several players popping up: Tamara, Postpay and Cashew are among those jostling for share in the region. 

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UAE’s G42 teams up with Viola in Israel to address worldwide tech employee shortage

TEL AVIV – A government-owned technology company in the United Arab Emirates and Israel’s largest private investor in tech firms launched Thursday a joint venture aimed at providing computer engineers and other skilled employees to businesses around the world.

The new company, Global Valley, will be based in Abu Dhabi, the UAE’s capital, and address an international shortage of programming talent. It’s the product of collaboration between Abu Dhabi’s G42, which has interests ranging from biotechnology to artificial intelligence, the Abu Dhabi Investment Office (ADIO) and Israel’s Viola Ventures, which has $5 billion in assets under management, they said in a statement.

Global Valley is also a banner project for the Abraham Accords, which normalized ties between the UAE and Israel in September 2020 and has generated $3.8 billion of trade volume between the two countries. G42 is controlled by Sheikh Tahnoon bin Zayed, the UAE’s national security adviser and younger brother of UAE President Mohamed bin Zayed, ruler of Abu Dhabi.

The new company will strengthen Abu Dhabi as a “dynamic hub for technological advancement and business prowess,” G42 Group Chief Executive Peng Xiao said in a statement on Thursday. Avi Zeevi, a co-founder and general partner of Viola, said Global Valley “will provide tech companies, in Israel and globally, with the best-of-class tech talent to fuel their future growth and support their activities in the region.”

While the ongoing global economic slowdown has led to layoffs that increased the supply of tech workers, the industry expects the employee shortage to grow. A study by the consulting firm Korn Ferry predicts a global talent gap by 2030 of some 85 million employees in the telecommunications, media and technology sector.

Since the normalization agreements, ADIO has also collaborated with OurCrowd, a Jerusalem-based venture capital that established an AI development center in Abu Dhabi, and Liquidity Group, a Tel Aviv-based lender specializing in fintech companies that opened an R&D center in the UAE capital. In December, Abu Dhabi’s ADQ investment firm agreed to buy control of Phoenix Holdings, Israel’s biggest insurer, for about $675 million. The deal is under regulatory review in Israel.

Global Valley “builds on the enthusiasm generated by the Abraham Accords, which continues to create important collaborations in sectors focused on innovation and advanced technology,” said ADIO Director General Abdulla Abdul Aziz AlShamsi.

Israeli start-ups confront economic slowdown + Arab culture on DC’s National Mall

Circuit Interview

Entrée Capital’s Eyal pushed start-ups to raise cash quickly, prepare to slash expenses

Avi Eyal, co-founder of Israel-based Entrée Capital, said he and his partners have spent the past year trying to prepare cash-burning startups for the economic slowdown that has hit technology businesses around the world. The venture capital firm, one of the biggest operating in Israel, manages about $1 billion in assets and has current investments in some 150 companies internationally. His message last year — the most lucrative ever for Israeli technology — was that CEOs should accelerate fundraising efforts and determine where expenses could be reduced.

Backup Plan: “We actually went to most of our portfolio companies, and in between June and December, we raised money for the bulk of them,” Eyal said in an interview with The Circuit’s Jonathan Ferziger. “At the same time, we told all the companies to have a backup plan, have a simulation of how they would cut costs very quickly, and how they would use that money, not to achieve the same growth but to achieve a quarter of their profits or less,” he said, “Some did, some didn’t.”

Serial Entrepreneur: Born in Israel and raised from age 6 in South Africa, Eyal is an engineer and a serial founder of start-ups who opened Entrée Capital in 2010 with internet entrepreneur Martin Moshal, a childhood friend. The firm was an early investor in Monday.com, a maker of workplace management software that held its initial public offering on the Nasdaq a year ago, and fraud-detecting Riskified, which trades on the New York Stock Exchange. Tracking the markets, both have shrunk in value since their 2021 IPOs.

Gulf Investments: Recently, Entrée has been investing in the Gulf, deepening relationships with Mubadala, the $284 billion Abu Dhabi sovereign wealth fund, and other Emirati businesses, after starting quietly before the September 2020 Abraham Accords. As the collapse of Israel’s coalition government sets up the fifth national election in three years, Eyal, 51, said the political instability holds much less of a threat to tech companies than the prospect of recession in the U.S., where many seek to raise money. “Governments come and go and I don’t think it has any impact on the technology space,” he said.

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World Cup warmup

Elon Musk, oil prices, World Cup soccer dominate stage at Qatar Economic Forum

Heads of state, oil executives and the richest man in the world pondered the prospects for a U.S. recession last week during the Qatar Economic Forum. The three-day conference in the capital city of Doha focused on matters ranging from the global economic slowdown and escalating crude prices to whether Qatar can rustle up enough beds to handle 1.2 million ticket-holders for soccer’s 2022 World Cup in November.

Twitter Riddle: Elon Musk, however, stole the show when he injected new uncertainty into the question of whether he will ultimately buy Twitter and talked about where he’s spending other portions of his $220 billion personal fortune. Musk, the 50-year-old chief executive of electric carmaker Tesla and rocket company SpaceX, said there were still “unresolved matters” holding up his $44 billion bid for the popular social media platform.

Recession Inevitable: Asked about the U.S. economy in an interview by video feed with John Micklethwait, editor-in-chief of Bloomberg News, Musk said a recession is inevitable and outlined the job cuts he’s ordered at Tesla that will reduce the salaried workforce by 10%. “As to whether there is a recession in the near-term, that is more likely than not.”

Energy Deals: Also at the conference was ExxonMobil CEO Darren Woods, who said oil companies will need three to five years to “catch up” on the investments required to assure adequate world supply. He spoke on a panel with Qatari Energy Minister Saad Al-Kaabi, with whom he also signed an investment agreement to take a 6.25% stake in Qatar’s $29 billion North Field liquefied natural gas project.

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Gulf Encounter

An Emirati ‘majlis’ presents Arab culture at Smithsonian Festival on the National Mall

On a scorching summer afternoon, tourists to Washington, D.C., came to relax in the shade of the makeshift wooden majlis, Arabic for a sitting room, on the National Mall. The Washington Monument towered in the background. Children picked up brushes to paint watercolor pictures of flowers. A veiled Emirati girl held a falcon on her wrist, demonstrating the Bedouin discipline of handling the predatory bird.

Traveling Falcons: The dozens of interactive demonstrations and events were part of this year’s Smithsonian Folklife Festival, spotlighting the culture of the United Arab Emirates. More than 90 participants flew in from the UAE to showcase the nation’s vibrant, diverse culture. (No special plane was needed for the falconry participants; travelers on Etihad Airways can bring a caged bird with them on the plane.)

Saffron Perfume: Mona Haddad, a young woman mixing scents from saffron and rosewood to create perfumes, said she learned the craft from her mother. She dabbed a bit of oil on her fingers and rubbed it behind one visitor’s ears, telling her the fresh scent would last for three days. The festival concludes its first week on June 27 and picks up again from June 30-July 4.

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Top Israeli energy official describes role of investors in promoting sustainable energy

LOS ANGELES — Gideon Friedmann, the acting chief scientist at Israel’s Ministry of Energy detailed on Wednesday how the country plans to transition to renewable energy and urged private investors to fund research in the field. Government support is important, said Friedmann, but investors will need to more forcefully enter the market if countries hope to work toward net-zero emissions.

“The private sector is not doing very well, because everyone here wants to get their return, and [a] high return. And it’s not easy to get a high return on infrastructure,” or a quick return, Friedmann told attendees at a panel at the Milken Institute Global Conference. According to Friedmann, it takes up to 15 years to build a power line, for instance, so any kind of fast returns would be impossible. 

At several sustainability-focused panels at Milken, environmental experts and financial professionals urged investors to consider putting more money into the research and development of technologies such as carbon capturing and bringing deep geothermal heat out of the ground. 

Developing new technologies may yield smaller returns in the short-term, Friedmann argued, but it will pay dividends as more countries move away from fossil fuels. 

“The money’s there,” Friedmann said, referring to private investments in established renewable companies focused on solar. “But it’s not, of course, geared towards research and development.” 

Israel is looking at the transportation and electricity sectors — responsible for 85% of emissions in Israel — as the key areas to reduce emissions, said Friedmann. 

Israel is a small country, “and so the way we think about innovation is that we are not going to set the trends. Trends are going to come from the outside,” noted Friedmann. Instead, Israel — due to its size — can be early to adopt new technologies and trends. 

Israel discovered natural gas reserves off its coast more than a decade ago, and natural gas is now used “as a bridge” in the transition to sustainable energy “because it’s much less polluting” than oil, explained Friedmann. “So natural gas is a solution, but we want also to convert the natural gas to something cleaner. We want to invest in R&D to do that.” 

Other investment into research and development can come from the government, Friedmann added. “It’s so important to have government investment in these areas,” he said. Last year the Israeli government invested $60 million in research and development, but the bulk of the investments will need to come from private capital.

“We also work on international collaboration,” Friedmann said. Israel is now collaborating with the United Arab Emirates, with which it normalized ties in late 2020, on a number of climate-related projects.

“There’s a lot of activity going on between the UAE and Israel,” Friedmann said. “It’s not in my area particularly. There’s a lot of discussion as well on R&D but nothing particularly yet. But I think in the near future there will be.”