Oman launches smart cities to boost net-zero, diversify economy

Oman has launched two smart city projects as part of its efforts to cut carbon emissions and diversify its economy.

The first city, for 10,000 residents, will be built in the mountain region of Jebel Akhdar, while the second, Thuraya City in Muscat, will house 8,000 people, Arabian Gulf Business Insights reports.

Both cities will rely on renewable energy, including solar power, and will be used to promote Oman’s carbon-free environment plans, the Ministry of Housing and Urban Planning said.

The announcement comes a week after the Sultanate launched the Oman Centre for Net Zero. Like other Gulf countries, Oman has been ramping up investment in green infrastructure to diversify its economy beyond oil and gas.

The push for smart cities also reflects the country’s commitment to attracting foreign investment and creating livable, future-ready urban environments.

UAE, Italy, Albania agree on $1.1 billion renewable energy cable

The UAE, Italy and Albania are working together on a $1.1 billion venture that includes building an undersea cable to carry renewable energy produced in Albania to Italy.

The deal signed Wednesday in Abu Dhabi will focus on large-scale renewable energy projects in Albania, including solar, wind, and hybrid systems involving battery storage, The National reports.

It follows a preliminary joint venture agreement last year between Abu Dhabi green energy company Masdar and Albania’s KESH to develop renewable energy projects in Albania.

Italian Prime Minister Giorgia Meloni said the deal “tangibly shows new forms of cooperation can be built even among seemingly distant partners – at least geographically speaking.”

Masdar unveils round-the-clock renewable energy in Abu Dhabi

Masdar, the Abu Dhabi-owned renewable energy company orchestrating this week’s crowded lineup of climate conferences in the UAE capital, introduced an innovation today in battery power.

Combining solar energy collection with stored-up battery capacity, Masdar will be able to provide renewable energy around the clock, Dr. Sultan Al Jaber, the company’s Chairman and the UAE Minister of Industry and Advanced Technology, announced on stage at the Abu Dhabi Sustainability Week conference. The project is being carried out in partnership with the Emirates Water and Electricity Company.

“For decades, the biggest barrier facing renewable energy has been intermittency. It has been the moon-shot challenge of our time,” said Al Jaber, who is also CEO of ADNOC and served as President of the U.N.’s COP28 climate conference when it was held in Dubai in 2023.

“How can we power a world that never sleeps with energy sources that do? How can we transform renewable resources into reliable power?” Al Jaber said “This will, for the first time ever, transform renewable energy into baseload energy. It is a first step that could become a giant leap.”

Along with attending the opening ADSW session, UAE President Sheikh Mohamed bin Zayed presented the annual Zayed Sustainability Prize awards on Tuesday. He also held meetings with Ilham Aliyev, President of Azerbaijan; Kassym-Jomart Tokayev, President of Kazakhstan; and other heads of state attending the conference.

The Daily Circuit: Egypt boosts green financing + China builds Saudi solar plant

👋 Hello from the Middle East!

Today in the Daily Circuit, we’re looking at the UAE’s crackdown on fraudulent labor recruiters, introduction to the region of new non-alcoholic beers, China’s contract to build a $972 million solar energy plant in Saudi Arabia and the summer holiday taken by Dubai’s ruling family in the Scottish Highlands. But first, Egypt takes a big step to reduce carbon emissions.

In a move considered crucial to mobilize green financing in the region, Egypt has launched its first voluntary carbon trading market. Companies will henceforth be able to use the market to register, buy and sell carbon certificates in Egypt and across Africa, creating a powerful incentive for investment in projects that reduce emissions.

Opening the market is an important step towards economic and environmental sustainability for Egypt and will position the country as a regional leader in the green economy, Rania Al-Mashat, Egypt’s Minister of Planning, Economic Development and International Cooperation, said at an event this week to mark the launch, Arab News reports. Several companies have reportedly already purchased credits this week.

The Egyptian government is also ramping up green energy projects, with plans to save $4.1 billion a year by adding up to 30 gigawatts of renewable energy capacity to its national grid in coming years. 

The developments mark a turnaround for Egypt, where extreme heat waves, combined with a crippling financial crisis, forced the government to cut electricity for up to three hours a day earlier this summer. An IMF-prescribed rescue package has since spurred a wave of reform and economic investment, with a heavy focus on green industries.

Egypt comes out with billions in deals from European summit

Egypt emerged from its weekend huddle with the European Union holding signed agreements for billions of dollars in business deals ranging from construction projects to renewable energy.

European Commission President Ursula von der Leyen told the Egypt-EU Investment Conference outside Cairo on Saturday that deals potentially worth over 40 billion euros ($43 billion) were being negotiated with Egyptian partners.

Among them were agreements on four green ammonia projects including an $11 billion deal with Frankfurt-based DAI Infrastruktur.

The Sovereign Fund of Egypt also signed a deal with BP, UAE’s Masdar, Egyptian infrastructure company Hassan Allam Utilities and Infinity Power to invest in a green ammonia plant in Ain Sukhna Port on the western coast of the Gulf of Suez.

EU officials said they would move ahead with plans to invest up to 1 billion euros  in the Egyptian economy, the first tranche of a 7.4 billion-euro European aid package agreed upon in March.  

Emirates Development Bank to provide billions in new financing to private sector

Emirates Development Bank (EDB) is loosening the purse strings, aiming to massively increase financing to the private sector by 2026.

The bank announced it will provide financing worth AED 30 billion ($8.2 billion) by 2026, targeting the 13,500 companies operating in key sectors for the UAE’s diversification efforts, including renewable energy, industry, advanced technology, healthcare and food security, according to Shaker Zainal, Business Finance Director at EDB.

On the sidelines of the Make it in the Emirates Forum on Monday, he said the bank has allocated $1.36 billion in financing for industrial projects so far this year.

Access to financing is one of the top hurdles for small- and medium-sized enterprises looking to grow in the Gulf. To address the access to credit or equity financing gap, development banks across the region have cropped up in the last decade, with EDB launching in 2015. 

Sovereign wealth funds behind vast majority of Middle East business deals, report shows

From artificial intelligence to renewable energy, Gulf sovereign wealth funds have become the go-to source for startup investment in a tight global economy.

A new study from Bain & Co. gives a graphic view of why Silicon Valley tech titans and New York financiers have been making pilgrimages to the Public Investment Fund in Riyadh, Mubadala in Abu Dhabi and the Qatar Investment Authority in Doha.

The Bain report, released on Wednesday, showed that 86% of Middle East business deals last year came from sovereign funds, up from 84% in 2022 and 68% in 2018.

The total value of those deals was an estimated $95 billion in 2023, down from a high of $98 billion in the previous year and more than triple the $26 billion recorded in 2018.

“The region’s sovereign wealth funds sit on an abundance of capital that they are using to accelerate an economic transformation, including an aggressive diversification away from hydrocarbon and an ambitious shift toward deals in Asia,” says the report, written by Bain’s Tom De Waele, Grégory Garnier, Riccardo Molinari and Elif Koc.

In their analysis of the sovereign wealth phenomenon, the authors look at how the funds have been used to build new industries such as esports in the Gulf, noting the $4.9 billion acquisition by PIF-owned Savvy Games of California-based Scopely in July.

The shift toward Asia is illustrated in Mubadala’s co-leading a $2 billion investment last November in the Chinese online fashion company Shein, as well as the $1 billion that the QIA sank into India’s Reliance Retail Ventures in September.

The report examines the role that sovereign funds are playing in the energy transition, noting that commitments made to net-zero goals require them to “actively advocate for emissions reduction in portfolio companies and evaluate investments in enabling decarbonization technologies.”

The Weekly Circuit: MBZ touches down in India + Phoenix mines Bitcoin

👋 Hello from the Middle East!

This week, we’re looking at the risks and rising costs of Red Sea shipping, a final reckoning of 2023 VC funding in MENA, the UAE’s moon mission agreement with NASA and Iran’s suspension of flights to Saudi Arabia. But first a glance at MBZ’s trip across the Gulf to visit the world’s most populous country.

All eyes are on India, one of the UAE’s most critical economic partners, as President Sheikh Mohamed bin Zayed touched down to attend the three-day Gujarat Global Summit that started on Wednesday. He was received at the airport by India’s Prime Minister Narendra Modi, the two leaders meeting for the fourth time in less than seven months – this time in Ahmedabad, one of the country’s largest cities.

The two nations announced agreements to develop renewable energy, food processing and healthcare. UAE port operator DP World and the government of Gujarat province also signed a preliminary agreement to build green ports.

The UAE-India relationship cannot be understated, with 3.5 million Indian expats living in the Emirates as of 2021, making up over a third of the country’s population. The UAE is India’s third-largest trading partner. In 2022, an economic partnership agreement was forged that helped boost bilateral trade to $38.6 billion in the first nine months of the year – almost double the figure recorded in the same period in 2020. During Modi’s visit to the UAE in July last year, the two nations signed an agreement to settle trade in the Indian rupees, instead of U.S. dollars.

Modi will travel to Abu Dhabi next month to inaugurate the Middle East’s first traditional Hindu stone temple, the BAPS Hindu Mandir, and attend a community reception of Indian expats planned at Zayed Sports City Stadium in the capital on Feb. 13.

Due to disruptions in the Red Sea, shipping costs soared by nearly 250% during the two months in which Yemen’s Houthi rebels have been attacking commercial vessels in the Red Sea. Charges for transporting a 40-foot container from China to Europe through the waterway have risen to about $4,000, up from $1,148 on Nov. 21 when the attacks began, according to the Drewry World Container Index, which tracks container freight rates.

Egypt and Abu Dhabi, however, are banking on the Red Sea’s future. AD Ports got approval from Egypt to connect the UAE capital to Red Sea ports in Upper Egypt under a new contract to build, operate and maintain terminals for cruise lines. Abu Dhabi’s Zayed Port will link to Safaga, Hurghada and Sharm El-Sheikh and eventually plug into a broader network of Arabian Gulf hubs, Aqaba and Europe and Asia, according to the Egyptian Ministry of Transport. The ADQ-backed AD Ports aims to have its first Egypt terminal operational by 2025.

The Abu Dhabi cryptocurrency mining and blockchain company Phoenix Group is investing $187 million in Bitcoin mining machines following a lucrative IPO on ADX last month. The company’s wholly owned subsidiary, Phoenix Computer Equipment Trading, has agreed through a related party Cypher Capital DMCC to purchase Bitcoin mining machines from industry giant Bitmain Development. International Holding Co., Abu Dhabi’s largest conglomerate chaired by Sheikh Tahnoon bin Zayed, bought a 10% stake in Phoenix in October of last year. Phoenix is also developing a crypto-mining farm in Oman, The Circuit previously reported. 

Saudi Arabia’s Tadawul stock exchange is launching a new index to track its top 50 companies, which account for 90% of the Riyadh-based bourse’s value. The new TASI 50 index, which will be used as a benchmark for exchange-traded funds, futures and options, is part of the kingdom’s efforts to attract foreign investors and diversify its economy beyond oil.

The UAE signed an agreement to participate in NASA’s Lunar Gateway project to build a new space station in cooperation with the U.S., Canada, Japan and the EU. The UAE’s Mohammed bin Rashid Space Centre agreed to supply the tailor-made airlock for entering and exiting the space station, which is expected to be launched by 2030. The agreement enables the UAE to send its own astronauts to the space station, which will be used as a transfer point in NASA’s Artemis project to establish a sustainable human presence on the moon.

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].

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Gulf venture financing held steady in 2023 amid funding drought in U.S., Europe, Israel

Saudi nationals attend GITEX at the Dubai World Trade Center in Dubai. (Photo by KARIM SAHIB/AFP via Getty Images)

Saudi Arabia has come out on top in a final reckoning of venture capital activity in 2023, as the kingdom continues to lure startups from innovative competitors in the Middle East and Africa, The Circuit’s Kelsey Warner reports. 

Debt expectations: Including debt financing deals, which propped up much of the deal activity last year, investment in Saudi Arabia-based startups grew 160%, while debt-free investment rose 48% compared to 2022, according to a new report from UAE startup platform Wamda. “Debt financing typically rises when investors become hesitant and, given what is happening both globally and regionally, I expect it to grow this year too,” Triska Hamid, editorial director at Wamda, told The Circuit. 

Bucking a trend: Gulf investors poured a steady flow of cash last year into tech companies, bucking the global pullback from startup funding in the midst of economic slowdown and regional conflicts. Financing from the MENA region rose 1% to about $4 billion in 2023. By contrast, seed funds for startups plunged 60% in Israel, 44% across Europe and 30% in the U.S..

Steep drop: Look at how capital was raised in MENA more broadly and it’s a less rosy picture: nearly half of total fundraising came through debt financing in 2023. Equity accounted for $2.2 billion across 488 deals, down 36% from the $3.45 billion raised in 2022 and a steep decline from the nearly 800 deals done last year, according to Wamda.  

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Saudi-Israeli joint venture aims to boost solar power use in Gulf

TEL AVIV, Israel – SolarEdge Technologies, one of Israel’s largest companies trading on the Nasdaq, is forming a joint renewable energy venture with a business group in Saudi Arabia amid White House efforts to broker a normalization pact between the two countries.

The new company created by SolarEdge and Ajlan & Bros Holding will be based in the Saudi capital of Riyadh and work to accelerate the adoption of solar power in the kingdom, the two partners said in a July 31 statement. SolarEdge, an S&P 500 company that maintains headquarters in both Herzliya, Israel, and Milpitas, Calif., produces solar inverters, which manage photovoltaic cells to make renewable energy more efficient. Ajlan is the majority shareholder.

The announcement came more than a year after the Saudi and Israeli companies signed a cooperation agreement that provided little detail of what the alliance would entail. It was one of 13 deals between Saudi and U.S. companies that were announced while U.S. President Joseph Biden visited Saudi Arabia in July 2022.

Zvi Lando, SolarEdge’s Israeli CEO, said in the statement that his company was “honored to partner with Ajlan & Bros. Holding and to support Saudi Arabia’s journey towards Vision 2030” – referring to a document outlining the kingdom’s efforts to wean the economy off oil and develop industries ranging from finance and tourism to sports and entertainment.

“SolarEdge is committed to driving the clean energy transition on a global scale, exemplified by this JV which will provide local enterprises in Saudi Arabia with the support they need to rapidly transition away from fossil fuels to clean solar energy and meet their aggressive renewable energy goals,” Lando said. The statement was released from the company’s California office and did not refer to its Israeli roots.

Israel and Saudi Arabia do not have diplomatic relations and their citizens are generally barred from each other’s territory unless they have second passports issued by other countries. The conditions are similar to those in the United Arab Emirates and Bahrain before the two Gulf states signed the U.S.-brokered Abraham Accords in 2020, establishing formal ties with Israel. Several Israeli companies have managed to operate in Saudi Arabia through subsidiaries registered in other countries.

Biden, who has repeatedly said he would like to facilitate an agreement between Israel and Saudi Arabia that would normalize relations between the two countries, sent senior aides to Riyadh last month to discuss a possible deal. Israeli Prime Minister Benjamin Netanyahu has said a Saudi normalization agreement is one of his greatest diplomatic priorities. Saudi Crown Prince Mohammed bin Salman, the kingdom’s prime minister, has said he would like to establish closer relations, but Israel would have to make significant gestures to the Palestinians before an agreement is reached.

SolarEdge is one of the largest of the close to 90 Israeli companies that trade on Wall Street. Its shares have fallen 38% this year and were last trading at $176.35, giving the company a market value of about $10 billion.

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.”