Mubadala’s Al Mubarak: Energy demand from AI creates huge investment opportunity
DAVOS, Switzerland – The enormous amount of energy needed by data centers engaged in artificial intelligence work presents a new opportunity for investors, Khaldoon Al Mubarak, Group CEO and Managing Director of Abu Dhabi’s Mubadala sovereign wealth fund, said Thursday at the Davos World Economic Forum meeting.
“There is an unbelievable demand story that’s going to be built up over the next years,” Al Mubarak said during a panel discussion on world trade. “I think that’s a very important opportunity.”
He said filling the energy needs for generative AI “can only work effectively in a globalization perspective, with countries working together, corporations and investors like ourselves working together and being efficient.”
Bin Touq: BRICS membership will bring new investment to UAE
DAVOS, Switzerland – Entry into the expanded bloc of BRICS countries will enable the United Arab Emirates to strengthen links with trading partners in the Southern Hemisphere and reap new investment, UAE Minister of Economy Abdullah bin Touq told a World Economic Forum audience on Thursday in Davos.
“I think that’s something where the UAE can play a role… in the engagement on the global level when it comes to BRICS,” the minister said during a panel discussion. “This engagement brings a lot of investment as well.”
The trading bloc, originally comprised of Brazil, Russia, India, China and South Africa, voted last August to invite the UAE, Saudi Arabia, Iran, Egypt, Ethiopia to join, starting Jan. 1. Saudi Arabia is reportedly still mulling the decision.
Saudi-backed Ma’aden’s CEO on the gold mine beneath the kingdom
DAVOS, Switzerland – Saudi Arabia is sitting on a gold mine. Also phosphate, bauxite, copper, zinc and nickel. Analysts have called the estimated value of its mineral resources – last put at $2.5 trillion – one of the most significant potential contributors to its economic transformation ambitions.
The Circuit caught up with Bob Wilt, who moved from California to Saudi Arabia two years ago to take up the helm of one of the world’s fastest growing mining operations, on the sidelines of the World Economic Forum Annual Meeting in Davos. This interview has been condensed and edited for length and clarity.
The Circuit: Saudi Arabia has a big presence in Davos this year. Why have you come to the World Economic Forum meeting, what are you looking to get out of this trip?
Bob Wilt: That’s right. We are just coming off the heels of the Future Minerals Forum, a third edition in Riyadh last week, where we brought at least 80 government delegations to Saudi Arabia to discuss the mineral potential of the kingdom. And we’re following up this week with meeting with partners and meeting with other mining companies, just to make sure the world knows that the third pillar of the Saudi economy is going to be metals and mining. We’re getting great responses. So, you know, there’s a lot of interest in the kingdom in general, in diversification of the economy, and part of that is obviously metals mining.
TC: A recent headline from The Economist said it well: Saudi Arabia wants to be the Saudi Arabia of minerals. Ma’aden has embarked on the largest exploration project in the world. Can you talk about the significance of what you’re looking for, and the size and scale?
BW: I joined the company [in February 2022] with the prospect that the mineral endowment of the kingdom was $1.3 trillion. And they subsequently announced last week that the potential is probably two and a half trillion dollars. And a lot of that is the result of the work that we’ve done in exploration over the last 18 months.
But as I’ve talked to most of the mining CEOs globally, last week and this week, I’ve yet to come across any major company that is spending as much or drilling as much as Ma’aden is. If you look at the mineral endowment of the kingdom, about 40% Is phosphate, which we’ve got a great handle on, and we’ve developed an industry around, so we’re very pleased with that. But then if you look at the rest of the endowment, it’s copper, it’s gold, it’s nickel, zinc. Rare earths are in there.
So we’re looking for all of the above. And we just had great luck. We’ve had great luck already with gold, we announced a pretty massive gold discovery towards the end of last year, adding another probably 10 million ounces in that discovery. So we know we’re gold-rich. And now we’re just looking to see what other transition minerals are available in the kingdom.
TC: Although it’s no stranger to drilling, to digging, this is a fairly steep scale-up for Saudi Arabia in a new industry. How much are you investing as a company into setting up to do what you’re doing?
BW: I think saying we’re new to the industry is, Ma’aden is 25 years old. We started as a small gold mining operation out of the government offices of energy and petroleum 25 years ago, but during the course of the 50s and 60s, the kingdom along with the U.S. Geological Survey had discovered phosphate and bauxite. So we developed an aluminum industry and a phosphate fertilizer industry in around 2009, 2010, 2011.
We’ve really been at this industrializing minerals for a decade or so. But yeah, that is fairly immature when you think about Rio Tinto celebrating its 150th anniversary this year. As far as how much we’re spending, what we’re developing, there’s a broad spectrum of where the spending is occurring. So we’ll probably spend 50 to 60 billion U.S. dollars in building out the infrastructure of the mining industry if this plays out the way we want it to by 2040. There’s a massive capital spend required in terms of building the mines and building the processing plants so that we think are potential in Saudi But there’s also the exploration. We’re spending on average about 120 to 130 million U.S. dollars annually on exploration. We just did an agreement with King Fahd University of Petroleum and Minerals. We partnered with them and donated 100 million SAR, about $27 million to develop a mining degree program there. We’re attacking this on all fronts: human capital, talent, capabilities, exploration and infrastructure build-out. It’s a massive undertaking.
TC: There seems to be more focus amid the energy transition to pay more attention to environmental impact as compared to the prior era of industrial mining. Is that naive to think this industry can change?
BW: I think that’s exactly right. If you think about some of the challenges we faced in the industry, part of its image, and we at Ma’aden don’t have legacy issues. So we’re not dealing with undoing mistakes of the past. We’re operating with a fairly clean slate. We’re able to take advantage of technology and cut the cycle times of exploration, from six weeks of processing data down to six days and things like that.
We do have the advantage of being the new kid on the block, if you will, with not having to fight legacy issues. But at the same time, we’re the victim of those issues in terms of talent and capabilities. You know, there’s like 17 people graduated in all of Australia last year with mining engineering degrees. There’s six universities in the UK that don’t allow mining companies to come and recruit on campus. Now, as a mining leader, I’m probably going to triple the size of my workforce in the next 10 or 15 years and I’m going to need talent, not only from Saudi Arabia, but from everywhere.
If you think about it, the energy transition is going to require six to nine times as many minerals over the next decade or so as we’ve got now. But there’s nobody to do the mining, there’s nobody to do the geology, nobody to do the exploration. It’s a huge issue and risk for the industry is how do we attract talent? And part of that is addressing the image of our forefathers that didn’t do such a great job.
TC: It seems too tidy to frame the narrative as Saudi Arabia emerging to support the energy transition, as the world’s second-biggest oil producer. But how significant of a role does Saudi Arabia plan to play in the global transition away from fossil fuels?
BW: Prince Abdulaziz [bin Salman], our Minister of Energy, spoke last week at the Future Minerals Forum and said that whether it’s fossil fuels or the energy solutions of the future, Saudi Arabia wants to lead the way. And whether we have the minerals in the ground in the kingdom to support that transition, or we become the processing hub. For the energy transition, Saudi Arabia will play a key role for sure. That’s very clear to me.
Scaramucci sees growing Saudi effort at Davos to court investors
DAVOS, Switzerland – Anthony Scaramucci, the founder of SkyBridge Capital and record-holder for shortest tenure as White House spokesman, is all over town – from surveying Saudi Arabia’s pop-up NEOM exhibition to throwing his own wine-tasting soiree.
Speaking to The Circuit after one of multiple speaking engagements, “The Mooch” said his secret to success in 17 years of coming to Davos is “Never be afraid to crash a party.”
Scaramucci held his own 12th annual SkyBridge Wine Party on Tuesday night with a raucous crowd squeezing into the Hotel Europe Tonic Piano Bar.
The 60-year-old financier also said he was impressed with the Saudi kingdom’s efforts to establish its presence at Davos, with Investment Minister Khalid Al-Falih addressing a breakfast crowd this morning and several cabinet members appearing on the conference’s main stage in the Davos Congress Center.
The three Davos Promenade stores that NEOM rented for the week to show off its futuristic $500 milliion mega-city project, as well as pop-ups down the street taken by Saudi Digital and the ancient desert city of AlUla, carried an unmistakable message, he said.
A veteran participant in Saudi Arabia’s Future Investment Initiative, known as “Davos in the Desert,” Scaramucci said the kingdom is sending a message.
The Saudis are saying, “Our country’s open for business. We want to integrate with the democracies. We have a beautiful country and you should feel safe in our country,” Scaramucci said, adding “I think this is part of a normalization process in general, and eventually with the State of Israel.”
500 Global’s Courtney Powell predicts accelerated M&A activity in 2024
DAVOS, Switzerland – Courtney Powell, COO and managing partner of San Francisco-based venture capital firm 500 Global, came to the World Economic Forum in Davos this year with a message for investors: Watch out for the Middle East and Africa.
Before heading out to meet up with her old pal and OpenAI boss Sam Altman, she shared in an interview with The Circuit how 500 Global navigated a tumultuous 2023, her predictions on exits and deal appetite for 2024 and her best advice to investors looking to make moves in the Gulf.
Powell, who moved to Riyadh three years ago, is a veteran investor in emerging markets and one of 500’s MENA-focused funds has raised $43 million so far. The parent fund has $2.7 billion in assets under management. This interview on the sidelines of the Davos conference has been condensed and edited for length and clarity.
The Circuit: This is your first trip to Davos. Why did you decide to come this year and are you here for 500 Global or are you wearing your 500 Global Middle East hat?
Courtney Powell: Always global… We’re really trying to get the message out there with a report that we’ve just released: a look at the top 30 most compelling venture markets. And the message behind that is that entrepreneurs should absolutely be accelerating GDP and economic growth. And so that’s the message that I’m typically talking about these days.
TC: What are the hotspots?
CP: The Middle East is going to continue to be an economic powerhouse moving forward. But Africa as well. So we liked what we’re seeing coming out of Senegal, Nigeria. And Rwanda is starting to pick up their support of entrepreneurship. Southeast Asia also.
We launched our first fund in Southeast Asia, I think, in 2013 and we had six unicorns out of that first fund. So we definitely are seeing a move into the later rounds now, seeing more coming from Vietnam, Cambodia, and some of the newer markets that are taking shape, although we already have two unicorns out of Vietnam. So yeah, you pick a country I can talk about.
TC: I want to talk more broadly about 2023, a tough year for VC. How did you navigate and how are you feeling about 2024?
CP: I think as an entrepreneur, what we’re hearing from our portfolio and witnessing was the fact that you had three or so years where capital was really abundant and I think decisions were being made pretty quickly. And 2023 was definitely a reckoning in the sense that all of a sudden people started talking about unit economics, people started talking about the exit market.
So for us, having been investing for over a decade now, we’ve seen the ups and downs. We were fortunate not to be too aggressively affected by that and we’re just really frank with our portfolio in terms of “time to stay disciplined. Now, if you have the cash in the bank, it didn’t matter if you had growth coming from organic growth or you can continue to afford to buy growth for whatever reason and be one of those folks to move ahead. But by and large, it was a little bit of a more austere time.
And then I think on the venture side, 500 was in a good position because we have a number of funds with a lot of diversification amongst the countries we’re investing, the stages we’re investing in. So we didn’t experience too much of an issue. But I think what we saw in some of the markets, especially where we’re training emerging fund managers, I think emerging countries struggle. Fundraising is really tough. And I think if you haven’t shown [returns to investors] or you just don’t have a track record, it’s a very difficult time.
TC: And you are currently raising a MENA-specific fund.
CP: We have a variety of funds right now. We are limited actually, we’re really regulated about what we can say. Suffice it to say that we will continue to raise funds, continue to deploy in the Middle East in particular, we have active seed funds right now to Series A. And even into later stages because we’re able to invest out of our global funds into the region.
TC: That’s a real issue right now, or it always has been in the region. Seed capital is widely available. And even the big check sizes, of course, are available because you have the sovereign capital. It’s that middle abyss.
CP: That’s music to my ears whenever I hear people articulate that accurately.
We’ve made almost 400 investments across the MENA region. And we have 14 or 15 companies in our portfolio, that are valued at over $100 million. So we definitely see the need for capital that goes even beyond what the sovereigns are able to provide. I think that is a gap. There are a number of funds that I’m aware of that are coming to market, actively fundraising to be able to make that leap, which I’m really glad to see. I was hoping to see a little bit more international interest.
TC: So far the exits we’ve seen in the region have been M&A, a couple SPACs. So 2024, are you thinking more of the same?
2024 is actually going to be an even more aggressive M&A market. I’m already catching wind of that. I think there will be a few big deals announced pretty soon. M&A continues to be a really strong exit pathway. However, I will say that there are six or seven companies across our own portfolio that we think have IPO potential. But I think that’s going to be in the next few years, not necessarily imminent.
I see a lot of people talk about, oh, there’s going to be 1,000 unicorns. We tend to take a much more conservative approach, because we’ve just seen the entire pipeline now since 2018. Unless they’re seeing deals that I’m not,I struggle to see that. However, one other point you’d like to make about the exit markets, that’s Tadawul [Saudi Arabia] and the ADX [Abu Dhabi], I think have a very, very strong chance of becoming even more popular markets to list particularly coming not just the region, but Africa and Southeast Asia, and even Eastern Europe.
Saudi in particular, I think what they’re making their Tadawul to be able to enable foreign capital to come in, hopefully see some dual listings in the future. You no longer have to simply target the exchange in London or New York. We’re really going to see a shift over the next five to 10 years where the Middle East will be strong.
TC: Last question, what advice do you have for people thinking about moving to the region?
CP: My advice for people in our industry moving to the region is it takes a year to form a thesis about the region, a year to figure out why you’re wrong and a year to fix it. It’s really easy to come in and kind of think you know what’s what. And, there’s a lot of expertise among financiers, and venture capitalists in the region, and there’s a lot to learn. So I hope that you come in with really just listening and trying to understand why the region has evolved the way it has and look at themselves as a contributor. They’re not creating anything. There’s already a vibrant, strong community of entrepreneurs and venture capitalists.
