Sovereign Wealth Funds Archives

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.

Abu Dhabi’s ADIA joins sovereign wealth’s $1 trillion club

As 2024 careens to its close – with financial markets jumping even as geopolitical conflicts multiply – Gulf sovereign wealth funds continue to pile up assets.

Leading the way has been ADIA, the Abu Dhabi Investment Authority, which entered the elite $1 trillion club this year with assets reaching $1.06 trillion – trailing only Norway and China – the Sovereign Wealth Fund Institute reports.

Among regional neighbors close to joining the club, the Kuwait Investment Authority holds $980 billion in assets and Saudi Arabia’s Public Investment Fund has about $950 billion. The Qatar Investment Authority stands at $530 billion, according to the SWF ranking.

In Abu Dhabi, a regional center for investing sovereign wealth, Mubadala trails ADIA with $330 billion, followed by ADQ with $250 billion.

Lulu eyes $1 billion IPO + M&A shifts to sovereigns

👋 Hello from the Middle East!

Today we’re looking at how sovereign wealth funds are propping up regional M&A activity, a fresh word of warning on the Red Sea, Mubadala’s plans with Abu Dhabi’s biggest developer for a new office tower and Emirates President Tim Clark’s spicy words for Boeing. But first, are IPOs headed for another banner year in the Gulf?

Lulu Group International, one of the biggest retail operators in the Middle East, is eyeing a potential $1 billion initial public offering as a solid pipeline of 29 IPOs is in the offing for 2024.

Banks have been asked to pitch for roles in Lulu’s planned dual listing in Riyadh and Abu Dhabi, Bloomberg reports, citing unnamed sources. Indian entrepreneur Yusuff Ali founded the grocery chain in the early 1990s. Today it has annual revenue of about $8 billion and employs more than 70,000 people, operating in 26 countries across the Middle East, Asia, the U.S. and Europe.

Robust post-listing performance of the region’s companies – returning an average of 40% to investors – has spurred interest in IPOs, bolstered by government reforms and a privatization push. Companies from the GCC region raised a total of $10.79 billion in IPOs last year, data showed. Although the overall value of funds raised through primary public listings dropped by 55% annually, mirroring global trends, the number of IPOs in the GCC declined marginally to 46 issuances in 2023 from 48 issuances in 2022, according to data from Bloomberg.

📰 Developing Stories

SOVEREIGN SHIFT

Middle East sovereign wealth funds are dominating merger and acquisition activity in the region amid an overall decline in dealmaking activity, according to new data from Bain & Co. Sovereign wealth funds poured an estimated $81.7 billion into M&As in 2023, representing 86% of the total value of deals during the year. The region saw around $95 billion worth of M&As, registering a 3% decline from the prior year, mirroring global trends. “The Middle East is undergoing a significant shift towards accelerating the energy transition, with a growing emphasis on clean energy investments and ambitious net-zero targets,” said Elif Koc, a partner at Bain & Company Middle East.

WORD OF WARNING

While raising its 2024 growth forecast for the world economy to 2.3%, the OECD warned that a widening of the Gaza conflict and escalated attacks on tankers in the Red Sea “could disrupt shipping more extensively than presently expected, intensify supply bottlenecks, and push up energy prices if traffic is interrupted in the key routes for the transport of oil and gas from the Middle East to Asia, Europe and the Americas.”

💲 Sovereign Circuit

Abu Dhabi Investment Authority: ADIA is mulling the purchase of a minority stake in Dalian Wanda Group Co.’s mall operator, Bloomberg reports. Private equity firm PAG and other investors hold a combined 60% in China’s Zhuhai Wanda, the world’s largest mall operator by square footage.

Mubadala: The sovereign wealth fund is partnering with Aldar, Abu Dhabi’s biggest developer, to build an office tower on Al Maryah Island, the capital’s financial center. The plan is part of Aldar’s larger development push to deploy $1.4 billion on a range of retail, commercial and residential assets across the emirate.

Public Investment Fund: The Private Sector Forum, hosted by the PIF, got underway in Riyadh on Tuesday with the sovereign wealth fund showcasing its portfolio companies to potential private sector investors and collaborators.

🗣 Circuit Chatter

💰 Annual Earnings: International Holding Co., the UAE’s most valuable listed company, reported annual earnings on Monday, posting a less than 1% growth in net profit for the full year 2023.

🇫🇷 Doubling Down: French defense contractor Thales plans to double its presence in Saudi Arabia, focusing on military sales and cybersecurity, CEO Patrice Caine told Arab News at the World Defense Show in Riyadh.

🌊 Under the Sea: Emirati telecom company e& will manage the UAE’s section of the 2Africa undersea cable project that is planned to connect Europe, Africa and Asia, while providing faster internet connections across the MENA region.

🇮🇱 Flight Halt: El Al Israel Airlines canceled flights to Marrakech, Morocco, citing a decline in demand from Israeli travelers. Israel’s flag carrier has also scrubbed flights to South Africa.

🇮🇷 Tehran Front: Iran used accounts at Lloyds and Santander banks to evade international sanctions, operating out of a London office of Petrochemical Commercial Co. near Buckingham Palace, the Financial Times reports.

↪↩ Closing Circuit

🛢️ Condensation Contract: QatarEnergy signed a 10-year deal to supply a unit of Japan’s Mitsui & Co. with up to 11 million barrels a year of condensates, the hydrocarbon liquid that condenses in natural gas production and is used in a variety of fuels.

✈️ Air Force Fuel: Airbus, the world’s largest aircraft manufacturer, said it’s in talks to sell Saudi Arabia more of its A330 tanker military planes as part of the kingdom’s efforts to build up its air force.

🇪🇬 Egypt Package: Goldman Sachs analysts expect the IMF’s financing package for Egypt to reach $12 billion, Asharq Bloomberg reports.

💸 Crypto Retail: Oobit, an Israeli-founded startup based in Singapore that enables crypto currency holders to pay at more than 100 million retailers around the world, raised $25 million in a Series A funding round.

🇹🇷 Cargo Carrier: Ghitha Holding, a subsidiary of Abu Dhabi-based International Holding Co., said it has acquired a 44% stake in Turkish cargo carrier MNG Airlines for $211 million in shares.

🌍 Power Circuit

Saudi Crown Prince Mohammed bin Salman met with U.S. Secretary of State Antony Blinken in Riyadh on Monday as part of the Washington envoy’s latest tour of the Middle East. Blinken will also travel to Egypt, Qatar and Israel this week.

Emir of Qatar Sheikh Tamim ibn Hamad Al Thani received a letter from President of South Korea Yeon Suk-yeol, during a meeting in his office at the Amiri Diwan in Doha on Tuesday. The letter was delivered by Shin Won-sik, the South Korean Minister of National Defense.

Sheikh Mohammed bin Rashid, UAE Prime Minister and Ruler of Dubai, chaired a Cabinet meeting at Qasr Al Watan, Abu Dhabi, on Monday where a new online platform was introduced to explain and highlight the country’s laws.

Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, attended the groundbreaking ceremony for the Hamdan Bin Rashid Cancer Hospital in Al Jaddaf on Monday. The 116-bed facility will open in 2026 and pays tribute to the late Deputy Ruler of Dubai, Sheikh Hamdan bin Rashid Al Maktoum.

➿ On the Circuit

Elena Sorlini has been tapped as the new Managing Director and Chief Executive Officer of Abu Dhabi Airports, which operates the capital’s five commercial airports, after serving as the interim head since June 2023.

Tim Clark, President of Emirates, said the Dubai-based airline will send its own engineers to monitor Boeing production lines, citing a “progress decline” in safety standards at the world’s second-largest commercial aircraft manufacturer. Emirates placed $52 billion in Boeing orders at the Dubai Air Show in November.

Faisal Abbas, Editor-in-Chief of Arab News, has a new book coming out in June called “Anecdotes of an Arab Anglophile,” from Nomad Publishing.

🎶 Culture Circuit

🎾 Tennis Titans: Saudi Arabia will host a new tennis tournament in October titled “6 Kings Slam,” in which No. 1-ranked Novak Dejokovik, No. 2 Carl Alcaraz and Grand Slam winner Rafa Nadal will compete for an as-yet undisclosed cash prize.

📅 Photo of the Day

At the Mubadala Abu Dhabi Open on Tuesday, ahead of the tennis, Becky Anderson (left), CNN Abu Dhabi Managing Editor, moderated a discussion on women’s health and peak performance with (left to right) Dr. Mai Al Jaber, CEO of Imperial College London Diabetes Center; Dr. Summia Zaher, Medical Director at Danat Al Emarat Hospital and Julie Khani, Vice President at Hologic. (Photo: The Circuit)

📅 Circuit Calendar

Feb. 3-11, Abu Dhabi, UAE: Mubadala Abu Dhabi Open. WTA brings top women tennis players to nine-day tournament. International Tennis Center, Zayed Sports City.

Feb. 7-8, Riyadh, Saudi Arabia: PIF Private Sector Forum. The gathering will showcase the Public Investment Fund and its portfolio companies’ business opportunities. King Abdul Aziz International Conference Center.

Feb. 9-11, Abu Dhabi, UAE: Middle East Comic Con. Nerds unite for the biggest pop culture gathering in the region. Abu Dhabi National Exhibitions Center.

Feb. 12-14. Dubai, UAE: World Governments Summit. Artificial intelligence takes center stage this year at the global gathering. Madinat Jumeirah.

Feb. 16-18. Munich, Germany: Munich Security Conference. Defense industry, foreign policy and national security leaders and gather for annual summit. Hotel Bayerischer Hof.

Feb. 21-22, Dubai, UAE: Step Conference. The Dubai edition of the leading tech festival for emerging markets. Internet City.

Feb. 22-23, Miami Beach, FL: FII Priority Miami. A summit on disruptive technology and investment trends hosted by the Future Investment Initiative Institute. Faena Hotel Miami Beach.

Feb. 26-29, Doha, Qatar: Web Summit Qatar. A Middle East edition of the technology crowd mega-event, gathering investors, entrepreneurs and business leaders. Doha Exhibition and Convention Centre.

Feb. 28-29, Abu Dhabi, UAE: Investopia. A gathering of investors hosted by SALT and Investopia, an investment platform launched by the UAE Ministry of Economy and backed by Mubadala and the Department of Economic Development. St. Regis Saadiyat.

March 1, Abu Dhabi, UAE: Abu Dhabi Family Office Summit. One of the largest meetings in the region for family office leaders and investors. Saadiyat Rotana.

March 4-7, Riyadh, Saudi Arabia: LEAP. A global technology conference for developers, startups, investors, C-suite and media. King Abdul Aziz International Conference Center.

March 5-6, Doha, Qatar: International LNG Forum. Gathering of industry leaders and key stakeholders to discuss the future of gas in a key export market. InterContinental Doha Beach.