Saudi PIF, Silver Lake, Affinity in talks for $50 billion EA buyout

Saudi Arabia’s Public Investment Fund, private equity firm Silver Lake and Jared Kushner’s Affinity Partners are part of a group that is attempting a $50 billion leveraged buyout of gaming titan Electronic Arts.

The group is in advanced talks for the deal, potentially the largest leveraged buyout in history, The Wall Street Journal reports.

The PIF, which already holds a 10% stake in EA, has been expanding gaming investments through its Savvy Games Group.

Silver Lake’s Gulf activity includes its investment of $800 million in the Abu Dhabi-owned tech company G42, which gave Managing Partner Egon Durban a seat on the board in 2021.

Kushner teams up with Alabbar to build Trump hotel in Belgrade

Jared Kushner, founder of Gulf-backed Affinity Partners, is bringing the Trump name to Belgrade.

Kushner tells Bloomberg in an interview published Thursday that Affinity will team up with Mohamed Alabbar, founder of Dubai-based Emaar Properties, to develop a luxury hotel and apartment complex on the site of the former Yugoslav defense ministry in the Serbian capital.

Kushner said he discussed the idea with Eric Trump, his brother-in-law and executive vice president at the Trump Organization, and they settled on the licensing deal.

Hussain Sajwani, founder of Emaar rival Damac Properties, appeared with President-elect Donald Trump at his Mar-a-Lago resort last week and pledged to invest $20 billion to build data centers in the U.S.

The Daily Circuit: Emaar matches Damac with its own Trump ties

👋 Hello from the Middle East!

In today’s Daily Circuit, we’re looking at Jared Kushner’s deal to build a Trump-branded hotel in Belgrade with Emaar’s Mohamed Alabbar, Aramco’s lithium exploration venture with mining company Ma’aden, Tesla’s plans to open pop-up stores in Saudi Arabia and the robots checking guests into Abu Dhabi’s St. Regis Saadiyat Island Resort. But first, the UAE’s nuclear power company ENEC is looking to expand overseas.

Beyond all the wind turbines, solar panels and hybrid batteries being touted during Abu Dhabi Sustainability Week, investors are looking at the latest iterations in nuclear power as potentially one of the most effective ways to address global warming.

Having completed the Barakah nuclear plant last year – the Gulf’s first atomic energy generating facility – Emirates Nuclear Energy Co. (ENEC) CEO Mohamed Al Hammadi tells Bloomberg in an interview that he’s looking to expand globally, particularly in the U.S. and Asia.

Among the developments stoking global demand for nuclear power is the galloping growth of artificial intelligence and its energy-hungry data centers, Al Hammadi said.

The 5.6-gigawatt Barakah plant has four reactors and generates about 60% of Abu Dhabi’s electricity. Al Hammadi said the site could double in size while using much of the existing infrastructure, pending regulatory approval.

Abu Dhabi’s Adnoc Gas, meanwhile, announced a partnership today with Houston, Tex.-based Baker Hughes to employ technology at its Habshan Gas Processing Plant that converts methane from natural gas into graphene and hydrogen.

British climate tech firm Levidian developed the patented “Loop” technology, which captures carbon from methane, the main component of natural gas, and converts it into graphene – a material expected to revolutionize industrial applications.
It is the first-ever use of the technology at an operational gas processing site, Adnoc Gas said.

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Kushner’s Affinity Partners to buy stake in Israel’s Shlomo car firm

TEL AVIV, Israel – After two years of scouting, Jared Kushner’s Gulf-backed private equity fund, Affinity Partners, will make its first investment in Israel, buying a $150 million minority stake in the country’s largest car rental agency and affiliated businesses.

Miami-based Affinity agreed on Wednesday to acquire 15% of the automotive and credit unit of Shlomo Group, which is located south of Tel Aviv in Tzrifin. Shlomo is the Israeli partner of Germany’s Sixt, the No. 5 international car rental company. The Israeli firm has a fleet of 78,000 vehicles, along with leasing, sales and car financing divisions.

“We are bullish on the long-term growth prospects of Israel and the broader new Middle East,” Kushner said in a statement, calling Shlomo Group’s growth from a small agency 55 years ago to the industry leader, “rock-solid.” Kushner is the son-in-law of former President Donald Trump and was his adviser in the White House.

The fund, which was backed by $2 billion from Saudi Arabia’s Public Investment Fund and hundreds of millions from sovereign wealth funds in the United Arab Emirates and Qatar when it was established in 2021, did not seek permission from any of its partners to buy the stake in the Israeli company, a person familiar with the matter told The Circuit. The person asked not to be identified due to sensitivities.

Saudi Arabia and Israel do not have diplomatic ties, although they are engaged in U.S.-brokered talks to normalize their relations, as the United Arab Emirates, Bahrain and Morocco did through the Abraham Accords in 2020. Qatar also doesn’t have official relations with Israel.

Under the agreement, a new $1 billion subsidiary will be created that will operate Shlomo Group’s rental, sales and credit business, the statement said. Affinity, which has an option to buy an additional 3%, will appoint a director and an observer to the division’s board of directors. It also plans to “promote joint company transactions in the Middle East and North America.”

Affinity, meanwhile, is also in negotiations to buy a 25% stake in Phoenix Insurance Agencies, Israel’s largest insurer, after a deal for the parent company was dropped by Abu Dhabi’s ADQ investment fund, Israel’s Calcalist newspaper reported.

The fund founded by Kushner is one of several potential buyers for the insurance company. Phoenix Group, a wide-ranging financial services firm based in the Tel Aviv suburb of Givatayim, was in talks to sell a controlling stake to ADQ in July. The deal would have been one of the largest between companies in the UAE and Israel, but the sale fell through due to regulatory hurdles, the sellers said in a July filing to the Tel Aviv Stock Exchange.

Affinity has reviewed requests for investment from more than 100 Israeli companies during the past two years, the person familiar with the matter said.

Investors dream big at Saudi-backed Florida summit

From WeWork founder Adam Neumann and former White House advisor Jared Kushner to LIV Golf Commissioner Greg Norman, a parade of investors and entrepreneurs mounted a stage in Miami Beach, Fla., last week to talk about why Saudi Arabia looms large in their future business plans.

Neumann, now building a residential real estate business called Flow that secured $350 million in funding from Silicon Valley venture capital firm Andreessen Horowitz, told the Future Investment Initiative’s Global Priority Summit on Friday that he sees the desert kingdom as an ideal environment for reinventing the way people live and work.

“What’s happening in Saudi right now is they’re dreaming up cities,” the 43-year-old Israeli who popularized the concept of shared office space said in an onstage conversation with investors Marc Andreessen and Ben Horowitz. “You’re starting from scratch. And that’s unbelievable, because you can apply the right technology and the right energy from the first day.”

Neumann, who also spoke about difficult personal lessons he drew after getting ousted as WeWork CEO in 2019, was among the most anticipated speakers at the two-day meeting sponsored by FII, a spinoff of the group’s annual economic conference in Riyadh, Saudi Arabia, that is colloquially known as Davos in the Desert. Both are backed by the kingdom’s Public Investment Fund, a $650 billion sovereign wealth fund whose investments run from crypto startups and gaming studios to the upstart LIV Golf league.

Yasir Al-Rumayyan, governor of PIF and chairman of state oil company Saudi Aramco, opened the proceedings on Thursday by saying he expects the PIF to grow to $1 trillion in assets by 2025 and between $2 trillion and $3 trillion by 2030. As head of Aramco, whose 2022 net income of $161 billion was the highest of any publicly traded company in the world, Al-Rumayyan said the company is committed to mitigating climate change but that shifting to sustainable energy sources needs to be gradual.

“Some of the governments around the world bullied the oil and gas companies,” Al-Rumayyan said. “It takes time to have a transition from fossil fuels to renewables.”

The Miami conference comes amid efforts by Americans and Saudis to ease tensions between the two countries, which have been close allies for more than seven decades.

Kushner, founder of Affinity Equity Partners, which has received a reported $2 billion in investment from the PIF, said he sees great opportunities in both the Saudi kingdom and the Florida city where he moved after departing the White House.

“I think Saudi Arabia and Miami are two places in the world that are shining examples of places that are on the rise, places that are not locked down by the past, places that are open-minded, [where] people are coming together,” he said.

Miami Mayor Francis X. Suarez, who opened the conference alongside Al-Rumayyan, said he learned about the opportunities in Saudi Arabia when he attended the three-day Riyadh meeting in October, which drew more than 6,000 participants, and agreed to host the Priority Summit in his city. Notable attendees  included investors Nelson Peltz of Trian Fund Management, Steve Wynn of Wynn Resorts, Josh Harris of 26North and Barry Sternlicht of Starwood Capital.

Reflecting on the Abraham Accords, the 2020 set of agreements he spearheaded to normalize Israel’s relations with the United Arab Emirates, Bahrain, Morocco and Sudan, Kushner said he was gratified to see regional political changes leading to wider commercial opportunities.

“The practical implications have been tremendous right now,” he said. “You have business happening in the Middle East that would not have been… you have defense agreements that are happening, which wouldn’t happen… The biggest thing for me is really two things. Number one is you’re seeing Arabs now, finally, and Muslims being able to say nice things about Israel and Jews, and you’re having human-to-human connections, which I think is now finally pushing back against the opposition, which is hard.”

The interfaith element was also picked up on by Tony Robbins, the best-selling author and motivational speaker, who closed out the conference’s final session on Friday, remarking on the confluence of Ramadan, Passover and Easter this week. Islam, Judaism and Christianity, he said, have given us “universal principles that have guided human behavior and helped us make it through wars, make it through pandemics… through recessions and depressions.”

Before discussing his business and political ventures, Kushner opened his remarks by condemning the indictment of former President Donald Trump, which had been made public the night before. The New York Times, meanwhile, published a story on Thursday, revealing investments by the UAE and Qatar in both Affinity and Liberty Strategic Capital, a fund founded by former U.S. Treasury Secretary Steven Mnuchin, who also spoke at the conference.

In his appearance on Thursday, Mnuchin spoke mostly about the U.S. economy and the collapse of Silicon Valley Bank, which was rescued and sold off by the Federal Deposit Insurance Corp.

“I think this was a complete failure of management, and it was also a failure of the regulators,” Mnuchin said. “This should have been seen way in advance, and it should never have occurred.”

The conference also heard from Tidjane Thiam, former CEO of Credit Suisse, who left the Zurich-based lender three years before its collapse last month. Thiam, now executive chairman of Freedom Acquisition Corp., said he sees the global economy as fundamentally strong and remains confident in the strength of the banking industry.

“It’s really a liquidity crisis that generally leads to the failure of an institution, not capital,” Thiam said in a panel discussion. “So, overall, I’m quite comfortable.”

Amid the backlash against cryptocurrencies following the arrest of FTX founder Sam Bankman-Fried, industry leader Michael Novogratz said traders have become “energized” and he sees prices of Bitcoin and its peers rebounding.

“We’re seeing overseas lots of activities and domestic, a government that’s really trying to smash the industry,” Novogratz, CEO of Galaxy Investment Partners, said on a panel. “Crypto started as the little person’s revolution — they didn’t trust governments,” he said. “You’re picking a fight with a crypto community that loves this technology and believes it almost with religious fervor.”  

Also speaking at the conference was Greg Norman, CEO and commissioner of the LIV Golf tournament, which is backed by the Saudi investment fund and has been sued by the established PGA tour for poaching its stars. Norman dismissed questions about the new golf tournament’s viability and said he was confident LIV would survive its battle with the PGA.

“A monopolist doesn’t like to be taken off its pedestal,” he said. “We’re not going to go anywhere.”

In his conversation with Neumann, Horowitz said he and Andreessen were excited about the enthusiastic reception and quick decision-making they found from Al-Rumayyan and Saudi Princess Reema bint Bandar Al Saud, the Saudi ambassador to Washington, when they visited Riyadh last year.

“Within a week we had a half dozen really interesting meetings set up,” Horowitz said, adding that the two partners will be bringing executives from their venture capital portfolio companies to Saudi Arabia this month. “That’s what a startup feels like,” he said.