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.

Qatar Airways acquires 25% stake in South Africa’s Airlink carrier

Qatar Airways is building up its business in Africa.

The state-owned carrier has acquired a 25% stake in Airlink, the South African regional airline that flies to 45 destinations in 15 African countries, without disclosing how much it paid.

Qatar already flies 29 routes in the continent and will operate a code-sharing arrangement with the South African airline.

“Our investment in Airlink further demonstrates how integral we see Africa being to our business’ future,” Qatar Airways CEO Badr Mohammed Al-Meer said in a statement.

The Qatari carrier also owns a 60% stake in Rwanda’s new $1.3 billion international airport and a 49% interest in Rwandair.

The Daily Circuit: Gamers head for Riyadh + Egypt courts European investors

👋 Hello from the Middle East!

Today in The Daily Circuit, we’re looking at the royal welcome Saudi Arabia is rolling out for next month’s Esports World Cup, Qatar Airways’ bid to own a 20% chunk of Virgin Australia, an English touch to the Trump golf resort taking shape in Oman and Sotheby’s plans for a Middle East “Hafla” this summer in London. But first, Egypt shows off its rebounding economy to investors from Europe.

Buttressed by more than $42 billion in property deals and loans since February, Egyptian President Abdel Fattah El-Sisi will be pulling out all the stops this weekend when he hosts a business summit catering to European leaders and investors.

At the peak of Egypt’s two-year financial crisis, trade with member-states of the European Union in 2023 slid 19% from the previous year – a benchmark El-Sisi will seek to reverse during the two-day Egypt-EU Investment Conference that starts on Saturday. As exports to Europe plunged almost 32% last year, Italy, Spain and Greece were the top European importers of Egyptian goods.

Joining the Egyptian President, cabinet members and Cairo business leaders at the Al Manara International Conference Centre will be European Commission President Ursula von der Leyen, along with government officials and investors from across the continent.

Egypt, coaxed by the International Monetary Fund, has embarked on a path of economic reform that includes divestment of billions in government assets and devaluation of the pound while implementing a fixed exchange rate. In turn the IMF and World Bank are arranging $8.7 billion in loans to help put the economy on course.

A breakthrough $35 billion property deal captured the attention of world investors in February as Abu Dhabi sovereign wealth fund ADQ led a group that bought development rights to Egypt’s Mediterranean coastal headland of Ras El-Hekma – soon to be dotted with luxury beach resorts.

📰 Developing Stories

GAME ON

Saudi Arabia is offering 90-day e-visas to Esports World Cup ticket holders as it gears up to host the debut competition that aims to put the kingdom on the international gaming map. Boulevard Riyadh City is the venue where more than 2,500 players will compete for a $60 million prize pool, the largest in esports history, from July 4 to Aug. 25.. Saudi Crown Prince Mohammed bin Salman, himself a “Call of Duty” fan, has earmarked $38 billion from the Public Investment Fund – with the aim of attracting 250 gaming companies and studios to set up shop in the country while creating 39,000 video game-related jobs. The homegrown strategy builds on the kingdom’s credentials in the e-arena with investments in the biggest players like Tencent, Nintendo, Activision Blizzard and Ubisoft. In March, Saudi Arabia’s National Development Fund and the Social Development Bank announced the establishment of two venture capital funds with a combined value of $120 million to back new esports companies in the kingdom.

STABLE CAPITAL

Fitch Ratings has affirmed Abu Dhabi’s rating at ‘AA’ with a stable outlook as the emirate’s government debt remains among the lowest the New York ratings agency has assessed. Sovereign net foreign assets, or its holdings abroad, are also among the highest, at 225% of GDP ($672 billion) at the end of 2023 and are up significantly compared to the previous year amid strong global stock markets. “We forecast Abu Dhabi will run fiscal surpluses of 5.4% of GDP in 2024 and 3.6% in 2025, after our estimate of 11% of GDP in 2023,” Fitch said. Oil production is also forecast to rise, in line with OPEC+’s June agreement to reach 3.375 million barrels per day by December 2025, which Fitch said was still well below Abu Dhabi’s stated production capacity of 4.85 million barrels per day. This will also partly offset lower Brent oil prices, which Fitch projects will average $70 per barrel in 2025 and $65 in 2026.

💲 Sovereign Circuit

Mubadala: Berlin-based insurance startup Wefox will replace CEO Mark Hartigan after the board rejected a proposal by Mubadala, its largest stakeholder, that he backed to sell the company, Bloomberg reported. The move comes as Abu Dhabi’s second-largest sovereign wealth fund takes a more active role in the start-ups it backed during the venture capital boom, as higher interest rates and profitability prospects have shelled the values of many once-high flying firms.

Qatar Investment Authority: Qatar Airways, which is wholly owned by the QIA, is in talks to acquire a 20% stake in Virgin Australia from Bain Capital, potentially providing entry into a market from which it was blocked last year, Bloomberg reports. 

Kuwait Investment Authority: Kuwait’s sovereign wealth fund, which has more than $800 billion in assets under management, has decided to set up a representative office, its third international branch along with offices in London and Shanghai.

International Holding Co.: IHC, the $240 billion Abu Dhabi conglomerate led by Sheikh Tahnoon Bin Zayed, held its General Assembly Meeting last week, during which shareholders approved a AED 5 billion ($1.4 billion) share buyback program, representing 0.6% of the company’s total shares.

↪↩ Closing Circuit

⛽ Gas Pact: U.S. energy firm Sempra has signed a non-binding 20-year agreement with Saudi Aramco to supply 5 million tons of liquefied natural gas per year from its Port Arthur project in Texas. 

💳 Pay Later: Confi, a Dubai-based fintech startup, secured a $5 million debt facility from an Abu Dhabi-based private family office to expand its “pay later” operations in the region.

💄 Natural Cosmetics: Saraya, a Japanese maker of natural cosmetics and sugar-free sweeteners, opened a $12 million factory in Egypt’s Suez Canal Economic Zone.

🩺 Aramco Med: Saudi Arabia’s Canadian Medical Center Co. signed a $4.4 million contract with Johns Hopkins Aramco Healthcare to operate nine clinics as part of an expansion plan.

🤒 Home Healthcare: Sensi.AI, an Israeli startup that uses artificial intelligence to make home health care more efficient, raised $31 million in a Series B financing round co-led by Zeev Ventures and Insight Partners.

🗣 Circuit Chatter

🌐 Data Acquisition: Abu Dhabi-based e& enterprise has taken ownership of Turkey’s GlassHouse, a provider of managed cloud, business continuity and data infrastructure services. Terms were not disclosed.

🌊 Gas Expansion: The partners in Israel’s offshore Leviathan gas field – Chevron, New Med Energy and Ratio Energies – said they will invest up to $500 million to expand its capacity after the government approved the export of more natural gas to boost the war-damaged economy.

⛳ Trump Resort: The Trump Organization agreed to partner with U.K.-based Dar Global to develop its $500 million golf resort and residential complex in Oman that is due to open in 2028.

🏦 Riyadh HQ: Mizuho Financial Group has become the latest Wall Street firm to comply with Saudi Arabia’s directive to foreign companies to set up their regional headquarters in the kingdom, Bloomberg reports.

🌍 Power Circuit

Sheikh Nahyan bin Mubarak, UAE Minister of Tolerance and Coexistence, presented degrees on Wednesday to 160 students graduating from the Abu Dhabi School of Management.

Sheikh Abdullah bin Zayed, UAE Minister of Foreign Affairs, received Syrian Foreign Minister Dr. Faisal Mekdad in Abu Dhabi on Wednesday. Over a working dinner, the pair discussed strengthening bilateral ties.

➿ On the Circuit

Razan Al Mubarak, President of the International Union for Conservation of Nature, was named Co-Chair of the Taskforce on Nature-Related Financial Disclosures on Wednesday. In 2011, she was the first woman to become Secretary-General of the Environment Agency – Abu Dhabi.

Josh Harris, Co-Founder of Apollo Global Management and a managing partner of the NBA’s Philadelphia 76ers, the NHL’s New Jersey Devils and the NFL’s Washington Commanders, notes the impact of Gulf sovereign wealth fund investment on the financial growth of American professional sports in an interview on Wednesday at Bloomberg Invest in New York.

Faisal Abbas, Editor-in-Chief of Arab News, signed copies of his new memoir “Anecdotes of an Arab Anglophile” at the Marylebone​​ location of Daunt Books in London on Tuesday.

🎶 Culture Circuit

🎨 London Calling: As much of the Gulf population decamps to cooler climes for the summer, Sotheby’s London will play host to a month of events and exhibitions to celebrate Middle Eastern culture. “Hafla,” meaning celebration in Arabic, will feature a series of exhibitions and public events running from August 12-30 on Bond Street. Five handbags designed by Saudi Arabian Princess Nourah Al-Faisal will be among the highlights, alongside more than 50 artworks from 50 years of modern Saudi art.

📷 Photo of the Day

🗓️ Circuit Calendar

June 26-30, Tan-Tan, Morocco: Tan-Tan Moussem Cultural Festival. Annual gathering held since 1963 by more than thirty tribes from southern Morocco, with participation from the UAE and other Middle East nations.

June 29-30, Cairo, Egypt: Egypt-EU Investment Conference. Business leaders and investors from Egypt and Europe engage around themes including green energy, nearshoring, digitization and tech startups. Al Manara International Conference Center.

July 1-3, Milan Italy: The Global Energy Transition Congress & Exhibition. An event bringing together thought leaders, innovators, and industry experts to address the challenges of accelerating the global energy transition. Milano Convention Centre.

July 10-11, Riyadh, Saudi Arabia: Global EV and Technology Forum. The inaugural summit in Saudi Arabia bringing together policymakers, companies and investors focused on sustainable urban mobility solutions. Riyadh International Convention & Exhibition 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. 

Aug. 12-15, Riyadh, Saudi Arabia: Saudi Food Expo. One of the kingdom’s largest trade shows for the food & beverage industry. Riyadh Front Exhibitions.