CloudKitchens taps banks for potential IPO in Riyadh, UAE

CloudKitchens, the Los Angeles food startup led by former Uber CEO Travis Kalanick, is adding more banks to its lineup for managing an IPO if it moves ahead with plans for a dual listing in Riyadh and Abu Dhabi.

The company, backed by Saudi Arabia’s Public Investment Fund, added JPMorgan, SNB Capital, and First Abu Dhabi Bank to existing adviser Goldman Sachs, Bloomberg reports.

CloudKitchens operates delivery-focused commercial kitchens around the world. It has connections to both the UAE and Saudi Arabia, with its Middle East unit based in Abu Dhabi and the PIF’s $400 million stake in the company.

Kalanick, who was ousted from Uber in 2017, cultivated deep ties with the PIF, which invested $3.5 billion in Uber.

Citi’s Jane Fraser sees Gulf states driving decade of Mideast growth

Citigroup CEO Jane Fraser sees the Gulf states sparking explosive growth in coming years across the region.

“The Middle East is probably on a rip for the next decade or so in terms of how much investment and new industries, new clients are coming in,” Fraser told Bloomberg in an interview today while visiting Dubai.

She highlighted the region’s expanding links with India and China as a powerful draw for global financial institutions like Citi, which has been building up operations alongside rivals such as Jefferies, Lazard, and JPMorgan.

With governments accelerating privatizations and encouraging stock listings, Fraser also pointed to the Gulf as a global hotspot for IPOs, which have raised more than $5 billion this year.

Flynas IPO oversubscribed by nearly 100 times before trading

The $1.1 billion IPO for Saudi Arabia’s Flynas low-cost airline has reached the runway and is ready for take-off after the offering to institutional investors was nearly 100 times oversubscribed.

The carrier, whose largest shareholders are Prince Alwaleed bin Talal’s Kingdom Holdings and the government’s Public Investment Fund, is the latest in a slew of IPOs for Saudi companies that have also encountered high demand, including Umm Al-Qura construction, which raised more than $500 million in March.

Flynas shares, which will start trading on Riyadh’s Tadawul Stock Exchange May 28, were set on Wednesday at 80 riyals apiece, the top of the range given by the IPO’s investment bankers.

Proceeds from the offering are slated for expanding Flynas’ fleet by 225 planes and launching several new flight hubs. The budget airline flies to 59 destinations and is popular with Muslim pilgrims to Mecca and expat workers from India, the Philippines and elsewhere.

Flynas is not alone among Gulf airlines interested in going public. Abu Dhabi-based Etihad Airways, owned by the ADQ sovereign wealth fund, is actively preparing for an IPO while Emirates and Qatar Airways have been mulling share sales for years.

Still waiting to stretch its wings is Riyadh Air, Saudi Arabia’s new national carrier wholly owned by the PIF, which plans to start flying its stylish royal blue jetliners this year in the fourth quarter.

UAE and Saudi companies lead the Gulf in new public offerings

Gulf markets continue to churn out IPOs as companies in the UAE and Saudi Arabia lead the drive to raise money by going public.

Alpha Data, an Abu Dhabi-based tech services company, announced plans today for its initial share sale next month with expectations of raising as much as $162 million when the shares start trading on March 11, Reuters reports.

Riyadh-based SMC Hospitals, meanwhile, has hired a group of investment banks, including EFG Hermes and SNB Capital, in preparation for its ADX debut before the summer, according to the news agency.

Fakeeh Care Group, another Saudi healthcare business, raised $760 million in June, making it the kingdom’s largest IPO of 2024.

Mubadala-backed Shein plans for super-sized London IPO

Fast fashion disruptor Shein is planning to confidentially file for a London public listing as soon as this week, Sky News reported, the first step in a super-sized initial public offering in the U.K.

The Singapore-headquartered company, which counts Abu Dhabi’s Mubadala as a major shareholder, had been targeting a New York IPO in the second half of last year but Beijing-Washington tensions waylaid those plans. 

To placate U.S. lawmakers in a bid to go public there, Shein has gone so far as to move its HQ from China to Singapore and stop selling its products in the world’s second-largest economy. Executive Chair Donald Tang told the Financial Times last month those efforts were not enough.  

Now the retailer is serving up a potential blockbuster to the sluggish London exchange, although a confidential filing does not necessarily mean a share sale is imminent. The filing will allow Shein to list more quickly if the company decides to move ahead on a market debut.

The 15-year-old company, which also counts venture capital group Sequoia China and private equity group General Atlantic as major backers, was valued at $66 billion in a funding round a year ago. 

While Shein did not invent the technology to help it predict rising fashion trends, the platform to give near real-time data to suppliers — who are mostly in China — created its unique “on-demand” production model, according to Business Insider, which looked into its production practices.

The data sharing allows for a fast turnaround from small order runs to much larger orders when an item is selling well, and to quickly drop an item when it isn’t.

The tight control it keeps over its supply chain has revolutionized fast fashion in recent years, making Shein more in demand among consumers than competitors like Zara and H&M.

Price is another factor in its popularity. McKinsey found the average cost per item from Shein is $14, while Zara is $34.

Weekly Circuit: Mobileye files for IPO + Lebanon gas deal looks on the horizon

👋 Good Monday morning in the Middle East!

Amid the global market turmoil that has torn through technology stocks this year, Intel Corp.’s Mobileye provided some hopeful news at the end of last week when it filed with the SEC for its initial public offering. The Israeli developer of self-driving car systems, which Intel bought five years ago for $15.3 billion, is still assessing when to hold the IPO and how much it will seek to raise, The Circuit reports.

A rare level of consensus between Israel and Lebanon appears to be emerging around the proposed U.S.-brokered deal to demarcate maritime borders and share drilling rights to natural gas fields in the Mediterranean Sea. While Israeli Prime Minister Yair Lapid and Hezbollah leader Hassan Nasrallah sent positive signals about the draft agreement circulated by White House mediator and energy envoy Amos Hochstein, the deal is being denounced by former Israeli Prime Minister Benjamin Netanyahu, who says he won’t be bound by its terms if he returns to office after Israel’s Nov. 1 election.

While Qatar is a whirlwind of preparations for November’s World Cup soccer tournament, this week in the United Arab Emirates belongs to the NBA. As detailed in our culture section below, Dubai’s Burj Khalifa is flashing images of the league’s basketball stars on its 163-story facade in advance of the first NBA games in the Gulf, a pair of pre-season matches between the Atlanta Hawks and Milwaukee Bucks.

Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].

Instead of our regular Monday delivery, the next issue of The Weekly Circuit will appear on Wednesday, Oct. 12, as we take a break for the Jewish holiday of Sukkot.

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SELF-DRIVEN

Mobileye files for IPO amid barren Wall Street landscape

While stocks drop ever lower and corporate funding sources remain dry, investors saw some light last week when Mobileye, the Jerusalem-based chipmaker for self-driving vehicles that is owned by Intel Corp., filed for its long-anticipated initial public offering, The Circuit’s Jonathan Ferziger reports.

Still unanswered: When the IPO will take place and how much Mobileye will seek to raise on the Nasdaq remains unanswered. But the company’s filing of its S-1 preliminary prospectus with the SEC late Friday generated rare optimism during a tough year. “I am thrilled,” Michael Granoff, founder and managing partner of Maniv Mobility, told The Circuit. “Mobileye is the most impactful company that has ever been created in Israel, and its impact may grow manyfold in the years to come,” said Granoff, a veteran automotive technology investor who doesn’t hold an interest in the company.

Shrinking IPOs: If Mobileye starts selling shares before the end of 2022 as executives have indicated, it will be one of the biggest IPOs of the year. The IPO market has shrunk amid a 33% slide in the Nasdaq Composite Index since the end of 2021, a steady rise in interest rates and global tensions from the Russia-Ukraine conflict. According to the filing, the IPO is being led by investment banks Morgan Stanley and Goldman Sachs. Among the 24 financial advisors listed are Citigroup, Barclays, Evercore ISI and RBC Capital Markets.

Raising billions: Intel, which bought Mobileye for about $15.3 billion in 2017, had hoped to raise $50 billion with the IPO and has since trimmed the target to $30 billion, according to Bloomberg. Neither company has confirmed the report. Only two IPOs have raised $1 billion or more on New York exchanges since Jan. 1, compared with 45 in 2021.

Chips and software: Mobileye is one of the leaders in creating software, semiconductor chips, cameras and sensory arrays to enable the development of self-driving vehicles. Chief executives from the world’s largest car companies have made the pilgrimage to Jerusalem to see the company and meet with CEO Amnon Shashua. In Friday’s filing, Mobileye said that Intel CEO Pat Gelsinger will serve as chairman of Mobileye and that the board will include Jon Huntsman, the former governor of Utah. Huntsman, who previously served as U.S. ambassador in both Russia and China and was a Republican candidate for president in 2012, serves on the board of Ford Motor Co.

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DEEP WATER

Lebanon gas compromise draws praise from Israel and Hezbollah

Israeli Prime Minister Yair Lapid and the leader of Lebanon’s Iran-backed Hezbollah organization offered praise for the terms of a U.S.-brokered deal to resolve a decade-long dispute over maritime borders and offshore gas-drilling rights, The Circuit reports. The proposed agreement over the Karish field in the Mediterranean Sea, the result of months of shuttle diplomacy by White House mediator and energy envoy Amos Hochstein, was presented to Lebanese President Michel Aoun on Saturday.

Safeguards interests: Lapid, speaking at a cabinet meeting in Jerusalem on Sunday, said that the agreement was undergoing legal review and would soon be submitted for government approval. “As we have demanded from the start, the proposal safeguards Israel’s full security-diplomatic interests, as well as our economic interests,” Lapid said in a statement. Although the text of the proposal has not been made public, the Israeli prime minister indicated he was willing to accept compromise in his country’s maritime borders and sharing of revenues between the two enemy countries.

Opening horizons: Hezbollah chief Hassan Nasrallah, who has threatened repeatedly to attack Israel’s shipborne platform if it begins extraction of the gas without a negotiated agreement, welcomed the latest proposal in a televised address as “a very important step” that may “open up wide horizons for the Lebanese people.” Hezbollah, which controls nearly half the seats in Lebanon’s 128-member parliament, is designated a terrorist organization by Israel and the U.S.

Netanyahu unbound: Israel’s opposition leader and former prime minister, Benjamin Netanyahu, said in a tweet that he would not be bound by the agreement if he returns to power after the country’s Nov. 1 elections.

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