Talabat acquires Instashop for $32 million ahead of IPO

Talabat has completed the acquisition of Instashop for $32 million, consolidating the two major UAE-based food and grocery delivery brands under one company.

Both companies are controlled by German parent Delivery Hero, which initiated the merger as part of a corporate restructuring ahead of Talabat’s $2 billion IPO in December.

Instashop will continue to operate as an independent brand while leveraging Talabat’s expansive network, according to a statement issued Thursday.

“We aim to create a more seamless and efficient delivery experience for our customers across the UAE and Egypt whilst also driving further product and technology synergies across our business,” Talabat Chief Executive Tomaso Rodriguez said.

LIV Golf a step closer to buying 6% stake in PGA commercial unit

LIV Golf, the upstart league backed by Saudi Arabia’s Public Investment Fund, is generating renewed buzz in its two-year dance with the PGA tour.

The sovereign wealth fund is nearing a deal to acquire a stake of about 6% in PGA Tour Enterprises, which would value the U.S.-based golf league’s commercial arm at $12 billion, Bloomberg reported on Wednesday, citing unnamed sources familiar with the negotiations.

The PIF started LIV Golf in 2022 as a rival to the PGA Tour, setting off court battles after the new league lured away star golfers for contracts worth hundreds of millions of dollars.

The two organizations agreed to a merger deal in 2023, but have since been unable to agree on the terms.

LIV is also considering a possible merger with Europe’s DP World Tour, Bloomberg reported last month.

The two golf leagues already have a strategic alliance on prize money growth and some reciprocal memberships.

Kuwait banks explore deal to create $50 billion Islamic lender

Two of Kuwait’s biggest banks are exploring a merger that would create an Islamic lender with more than $50 billion in assets.

The proposed tie-up comes amid a wave of banking consolidation across the Middle East, partly driven by competition for financing large-scale projects as Gulf countries rapidly diversify away from oil. 

Boubyan Bank, with assets worth $29 billion and Gulf Bank, with assets worth $24 billion, will conduct due diligence and valuation studies into the potential deal, the two lenders said in a statement.

The move comes as Kuwait Finance House weighs taking a large stake in Saudi Investment Bank, while National Bank of Bahrain considers a potential merger with Bank of Bahrain and Kuwait.

Consolidation of financial institutions in the GCC is being driven by the need to create lenders with greater scale as countries seek financing for mega-projects and other diversification activities aimed at boosting the non-oil economy.

These capital intensive activities, and the development and diversification of funding channels are expected to drive the GCC’s debt capital market to reach $1 trillion outstanding by next year, according to a new report from Fitch. 

Saudi Arabia, which is contending with lower oil profits and mounting expenses associated with its Vision 2030 transformation plans, held a 43% share of the $940 billion outstanding government debt in the GCC at the end of Q1 2024, while the UAE held 30%.

Around 40% of outstanding government debt was sukuk – bonds compliant with Islamic sharia law – while the rest was in conventional bonds, Fitch said.

Environmental, social, and governance (ESG) sukuk, meanwhile, reached $18 billion outstanding in GCC countries, driven by increasing sustainability commitments, according to Fitch.

The Weekly Circuit: UAE completes nuclear plant + Gulf amps up tourism

👋 Hello from the Middle East!

This week, we’re watching the $4 billion merger of Emirati space tech companies, Mubadala’s natural gas discovery off the coast of Indonesia, the high costs for cargo ships trying to avoid threats in the Red Sea and the proliferation of billionaire family offices in Abu Dhabi. But first, a look at the UAE’s nuclear energy strategy.

The UAE is on a path toward generating 25% of its electricity needs through nuclear power. State-owned Emirates Nuclear Energy Corporation (ENEC) announced completion of Unit 4 at its Barakah nuclear plant on Tuesday, which will be followed by a testing phase before the facility comes on line early next year.

Barakah is a centerpiece of the UAE’s energy sustainability campaign, which has committed to a goal of reaching net zero carbon emissions by 2050. The nuclear plant’s four units are expected to produce one-quarter of the nation’s power requirements for the next 60 years.

UAE regulatory officials have sought to allay safety concerns about such broad use of nuclear power, asserting that Barakah would be able to withstand natural disasters such as the 7.8 magnitude earthquake that devastated Turkey and Syria in February. The plant sits on the UAE’s Gulf coast just east of the Saudi border.

When it comes to the push for Gulf economies to diversify from oil, tourism plays a central role. Despite geopolitical tension, international air travel across the Middle East and North Africa is up 11%, according to new data from online travel booking site Wego. In the coming year, Saudi Arabia’s mega-project Neom will welcome its first tourists, one of Dubai’s most hotly anticipated hotels is set to open and a unified tourism visa is expected to encourage Gulf residents to explore what’s in their own backyard. 

Neom enters the scene just as Dubai puts the finishing touches on a trio of hotels that put it on the tourism map nearly three decades ago. Next to the wave-shaped Jumeirah Beach Hotel that opened in 1997 and the sailboat-inspired Burj Al Arab two years later, the third and final Jumeirah waterfront property will welcome guests in the second half of 2024. Keeping to the maritime theme, Marsa Al Arab takes inspiration from an avant-garde super-yacht. Meanwhile, the upcoming Gulf Cooperation Council unified visa, which mimics the European Union’s Schengen Zone, should turbo-charge regional travel. The visa is expected to be rolled out as soon as next year.

A grim picture for deal activity is emerging as investors prepare to close the books in 2023. While the Middle East has found itself at the center of geopolitical uncertainty in recent months, the region has largely mirrored global trends, London-based GlobalData said in a new report. Mergers and acquisitions, private equity and venture funding in the Middle East and Africa plunged 26% year-on-year between January and November 2023 while globally, the dip was slightly smaller at 24%.

In a push to emerge from the global downturn and the impact of the Gaza war, Jerusalem-based OurCrowd announced the first close of its $50 million Israel Resilience Fund. The new fund has made commitments to invest in eight startups affected by the conflict, including Blue Tree, which has developed proprietary technology to reduce sugar in natural beverages and whose employees were recently evacuated from its facility near the Lebanon border. Also receiving money is Edgybees, whose satellite mapping technology is being used by the Israel Defense Forces.

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

Note to readers: We will be taking off next week and resume publishing on Wednesday, Jan. 3. Happy New Year!

OUTER LIMITS

UAE takes leap in space tech with Yahsat-Bayanat merger

Abu Dhabi is consolidating two of its biggest space technology companies to create a new entity focused on artificial intelligence and satellite communications that’s worth about $4 billion, The Circuit’s Kelsey Warner reports. 

Creating synergy: The two ADX-listed companies – Al Yah Satellite Communications Co., better known as Yahsat, and Bayanat – said in statements to the stock exchange on Tuesday that their boards of directors voted to recommend their merger to shareholders.

Immense potential: “This potential could put the merger at the cutting edge of satellite operations and geospatial solutions globally and will make it a force to be reckoned with,” said Anna Hazlett, founder of UAE-based space strategy and investment firm AzurX, told The Circuit.

Long term strategy: In 2022, the UAE, the second largest economy in the Arab world, said it planned to invest more than $820 million in the private space sector, building on $408 million already poured into the nascent field over the preceding eight years as economic diversification efforts gather pace across the region. 

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