The Line Archives

Neom’s mega-city The Line comes under scrutiny for soaring costs

Saudi Arabia’s Public Investment Fund is taking a critical look at Neom and its banner construction project The Line to decide whether building the futuristic city from scratch is still feasible.

The sovereign wealth fund has asked consulting firms to conduct a strategic review and suggest possible changes amid declining oil prices and concerns that the kingdom can’t afford the 170-kilometer (105-mile) project as originally laid out in 2017, Bloomberg reports.

Neom, the PIF’s umbrella company for The Line and an array of other megaprojects in western Saudi Arabia, issued a statement on Monday outlining its aims in assessing The Line.

“As is typical with large-scale, multi-year projects, strategic reviews are common practice and occur several times over the course of a major development project or infrastructure program,” Neom said. “The Line remains a strategic priority and Neom is focused on maintaining operational continuity, improving efficiencies and accelerating progress to match the overall vision and objectives of the project.”

The review reflects changes in the Saudi economy since the stunning $500 billion Neom development was introduced at a gathering of international investors eight years ago by Crown Prince Mohammed bin Salman.

Prices for oil, the bedrock of the kingdom’s finances, reached as high as $139 a barrel in 2022 and have since fallen to about $71. Saudi Arabia needs a price of $96 a barrel to balance its budget, and $113 if domestic spending by the PIF on the Crown Prince’s projects is included, according to Bloomberg Economics.

The Daily Circuit: Lulu IPO drops in debut + PIF sells telecom stake

👋 Hello from the Middle East

In The Daily Circuit today, we’re looking at the PIF’s sale of a 2% stake in Saudi Telecom, ADIA’s mounting private equity investments, NEOM’s focus on getting its sky-high soccer stadium built in time for the 2034 World Cup and Etihad’s $1 billion cabin retrofitting. But first, Lulu’s underwhelming ADX debut.

After electrifying investors across the Gulf who wrestled to buy its shares, mega-grocery chain Lulu Retail Holdings’ IPO landed today with a thud.

Touted as the UAE’s biggest initial stock sale this year, priced at the top of its marketed range and oversubscribed within an hour of its offering, Lulu fell as much as 2.5% in trading on the Abu Dhabi Securities Exchange. The IPO looked like such a sure bet that Lulu boosted the size of the offering to 30% from its initial plan for a 25% sale.

Lulu’s slow start comes weeks after a $2 billion energy-sector IPO by Oman’s OQ Exploration & Production dropped 8% in its debut, Bloomberg reports. Dubai-based supermarket chain Spinneys, which raised $374 million in May, also had an undramatic debut and continues to trade around the offer price. Both those deals were oversubscribed too.

The Middle East is in the midst of an IPO boom that’s seen firms raise around $10 billion this year. Coming soon is an initial share sale from Talabat, the Middle East unit of Berlin-based Delivery Hero, that could reach a value higher than its parent.

Since its founding in 1973, Lulu has grown into one of the Middle East’s largest hypermarket chains and reported a profit of $192 million last year. It serves over half a million shoppers a day from 240 stores in six countries across the Gulf, and employs more than 50,000 people.

The IPO boosted India-born founder Yusuff Ali’s net worth to $7.1 billion, cementing his position as the UAE’s second-richest private individual, according to the Bloomberg Billionaires Index.

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📰 Developing Stories

SPORTS FOCUS

In the wake of NEOM’s construction delays and corporate reorganization, the Saudi megaproject is making sure it’s ready to host a series of high-profile sporting events. Work on The Line, NEOM’s $500 billion linear desert city, is now focused on finishing a mile-long stretch including a stadium that is expected to host the final match of the 2034 soccer World Cup, Reuters reports. Another priority is the completion of Trojena, a planned mountain ski resort which will host the Asian Winter Games in 2029. NEOM announced the departure of its longtime Chief Executive, Nadhmi al-Nasr, and his replacement by Aiman al-Mudaifer as acting CEO

SPRUCING UP

Plusher business-class seats, high-speed internet and a dazzlingarray of new entertainment choices. Etihad Airways plans to spend as much as $1 billion to overhaul widebody aircraft as the Abu Dhabi-based carrier looks to refresh its fleet amid delays from planemakers, Bloombergreports. The retrofit program, Etihad’s largest to date, will start with about 50 twin-aisle jets, the Boeing Co. 787 and 777 models, and later expand to all widebody aircraft. “We’re going to retrofit even the planes that don’t need a retrofit, but we believe it’s important for the airline,” to have consistency across the fleet, Etihad CEO Antonoaldo Neves told the news agency.

💲 Sovereign Circuit

Public Investment Fund: The Saudi sovereign wealth fund is selling a 2% stake in Saudi Telecom Co. in a bid to raise about $1 billion for the government’s economic overhaul plan.

Kuwait Investment Authority: Kuwaiti officials are consideringleadership changes at the sovereign wealth fund, potentially replacing Managing Director Ghanem Al-Ghenaiman, Bloomberg reports.

Abu Dhabi Investment Authority: ADIA, which manages close to $1 trillion in assets, is increasing its allocation of investments in the private equity sector, according to the fund’s 2023 annual review published today.

ADQ: The Abu Dhabi sovereign wealth fund is developing its petrochemicals portfolio, “adding value to upstream output – but also overlapping with the interests of Abu Dhabi’s other state-owned investor, Mubadala, which has its own assets in the sector,” SWF Global reports.

↪↩ Closing Circuit

📈 Share Buyback: International Holding Co., Abu Dhabi’s largest publicly traded firm, said it has launched a share buyback program worth almost $1.4 billion.

☀️ Solar Power: Emirates Development Bank has introduced a $27 million financing program with Dubai-based Yellow Door Energy to support the development of more than 60 solar plants across the UAE.

💳 Digital Wallet: Perno, a Dubai-based startup that developed a spending management platform, raised $7 million in a pre-Series A funding round led by Shorooq and Augmentum Fintech.

🏃🏾‍♀️ Fitness Fund: Saudi fitness chain Armah Sports has secured a $48 million Islamic-compliant credit facility from Bank AlJazira to fund capital expenditures for expansion, with a seven-year term and a two-year grace period.

🩺 Healthcare Spending: Bluespine, an Israeli startup that helps manage healthcare spending for self-insured employers, raised $7.2 million in a seed funding round led by Team8.

🗣 Circuit Chatter

🌟 Growing Bigger: Dubai World Trade Centre has launched the first phase of its $2.7 billion expansion plan for the Dubai Exhibition Centre at Expo City Dubai.

🌎 Green Partners: Abu Dhabi renewable energy company Masdar and Albania’s state power utility Kesh signed a preliminary agreement to form a joint venture for developing large-scale renewable energy projects in Albania.

🇨🇳 Banking Adventures: Goldman Sachs’ decades-long efforts to “weave itself into the fabric” of China’s investment banking world and play a key role in other international markets is explored in a feature story by the Financial Times.

🌍 Power Circuit

Saudi Crown Prince Muhammed bin Salman held a phone conversation with Russian President Vladimir Putin in which, among other issues, they discussed the importance of coordination among OPEC+ states, according to a Kremlin statement.

Qatar’s Emir Sheikh Tamim bin Hamad Al Thani made a visit to Turkey today for high-level meetings with the government of Turkish President Recip Erdogan.

➿ On the Circuit

Saudi Minister of Energy Prince Abdulaziz bin Salman led the kingdom’s delegation to the COP29 climate summit in Azerbaijan, outlining a policy that “aims for investments in clean energy to encompass all renewable and traditional resources, while respecting the sovereign rights of countries to utilize their natural resources.”

Yasir Al-Rumayyan, Governor of Saudi Arabia’s Public Investment Fund, is profiled by Fortune magazine in its 100 Most Powerful People in Business for 2024 issue, noting his key role as Chairman of Saudi Aramco in the kingdom’s economic reforms and his involvement in soccer as Chairman of Newcastle United in the English Premier League.

Yousef Al Nowais, CEO of Arab Development Establishment, a UAE business group active in gas and petrochemicals, has acquired a 5% stake in Nextchem, valuing the engineering company’s subsidiary at $1.3 billion.

🎶 Culture Circuit

💃 Riyadh Glamor: Jennifer Lopez, Celine Dion and Halle Berry hit the stage in Riyadh on Wednesday night as Lebanese designer Elie Saab put on a fashion spectacle, Arab News reports. The show, part of the Riyadh Season festival, began with a high-octane performance by Lopez, wearing a revealing dress made up of white crystals. Also featured was “an ode to the female figure,” where dresses in different shades of pink and green were lit up on stage to music by singer-songwriter Camila Cabello.

📷 Photo of the Day

**Emirates repainted one of its Airbus A380** planes before its flight to New York to mark the airline’s sponsorship of the Emirates NBA Cup basketball series that runs through Dec. 17 (Photo: Emirates)

📅 Circuit Calendar

Nov. 15-17, Abu Dhabi, UAE: Sir Bani Yas Forum, The three-day annual retreat, sponsored by the UAE Ministry of Foreign Affairs and the Atlantic Council, brings together top decision-makers and experts to debate regional peace, security and economic transformation. Qasr Al Sarab Resort.

Nov. 19-20, Dubai: Dubai Future Forum. Bringing in different people to discuss the future of the world and youth’s role in changing the narrative. Museum of the Future.

Nov. 20-24, Abu Dhabi: Abu Dhabi Art. Annual art fair brings together Emirati and international galleries, offering artworks for sale, alongside exhibitions, artist commissions and installations. Manarat Al Saadiyat.

Nov. 21-24, Abu Dhabi: Abu Dhabi International Boat Show. A platform for marine enthusiasts that offers live performances and the opportunity to navigate the waters of Abu Dhabi. ADNEC.

Nov. 23-24, Dubai: Forbes Medical Tourism and Wellness Summit. Discussions will center around efforts by participant countries to attract patients from abroad for medical care. Jumeirah Beach Hotel.

Nov. 26-28, Abu Dhabi: Global Media Congress. The event brings together a range of media groups to discuss the latest trends in publishing and media.

Nov. 26-29, Dubai: Big5 Global. The event gathers participants who are interested in technology and construction. Dubai World Trade Centre.

Dec. 4-6, Abu Dhabi: Abu Dhabi Business Week. Participants will hear from business pioneers who built billion-dollar enterprises, developed global brands and led significant campaigns. ADNEC.

Dec. 5-6, Abu Dhabi: Milken Institute Middle East and Africa Summit. Corporate executives, investors, government officials, and philanthropists gather to address the globe’s most pressing issues. St. Regis Saadiyat Island.

Dec. 5-8, Abu Dhabi: Abu Dhabi Grand Prix 2024. World’s fastest race drivers compete in the Abu Dhabi leg of the Formula One season. Yas Marina Circuit.

Dec. 5-14, Jeddah, Saudi Arabia: Red Sea Film Festival. Directors from Saudi Arabia and abroad will premiere feature films at the 10-day event. Al-Balad.

Dec. 9-10, Abu Dhabi: The Bitcoin Conference. The conference connects industry leaders in an exposition hall featuring a fusion of technology and art. ADNEC.

Dec. 9-12, Abu Dhabi: Abu Dhabi Finance Week. Market experts and entrepreneurs from around the world discuss the latest market trends. Al Maryah Island, ADGM Square.

NEOM teams up on $187 million cement factories to build The Line

Saudi Arabia is taking concrete steps to accelerate construction of The Line, its planned trillion-dollar city of the future.

NEOM, which runs the project and surrounding development of the kingdom’s Red Sea coast, signed a partnership agreement with a Saudi construction company to build cement factories costing $187 million that will be used for the structure, which is planned to extend 110 miles across the desert.

The manufacturing facilities, which begin operations in November, will use carbon capture technology and a range of energy-saving innovations, NEOM CEO Nadhmi Al-Nasr told the Saudi Press Agency.

He said the deal illustrates “the critical role local partnerships play in delivering this transformational project efficiently and sustainably.”