Gulf states vie for investors on Swiss resort’s frigid streets

As the World Economic Forum opened Monday on the icy streets of Davos, Saudi Arabia and the UAE were beckoning delegates to come in from the cold – touting a range of gatherings inside their well-heated pavilions on the Swiss ski resort’s main drag.

Saudi House, an all-in-one base at 105 Promenade Street that the kingdom is using to attract foreign investment, will feature programs and exhibits prepared by 13 separate agencies.

They range from the Investment and Tourism ministries to the Royal Commission for AlUla – the ancient desert city, now a center for museums and resorts – to the Diriyah Company – which is carrying out a $63 billion overhaul of Riyadh’s historic core.

Walk-in visitors are generally treated to assorted varieties of Saudi dates and cardamom-infused coffee. Saudi House will also be hosting more elaborate luncheons and dinner meetings during the week.

“The kingdom’s approach to unlocking its potential involves really rewriting the economic playbook,” Saudi Economy and Planning Minister Faisal Alibrahim told Arab News in an interview published today.

“This is not just about investments or the government spending money,” he said. “This is about creating an environment that’s vibrant, that attracts capital, attracts minds to the opportunities that are being created in the kingdom led today by the government.”

Down the road at 68 Promenade Street, the UAE will also have a crowded schedule. On Tuesday, G42 Chief Operating Officer Mansoor Al Mansoori will host Brad Smith, Vice Chair and President of Microsoft, for a public chat on “how global cooperation can address challenges like ethical governance, inclusivity, and shared innovation.”

Saudi Arabia has patterned its own annual business forum after the Swiss gathering, establishing the Future Investment Initiative conference in 2017 that was immediately dubbed “Davos in the Desert.”

At its eighth edition last October, some 7,000 movers and shakers poured into Riyadh for the get-together that takes place at the opulent Ritz Carlton hotel and in the vast halls of the adjacent King Abdul Aziz International Conference Center.

Getting a jump on the confab, the developers of Saudi Arabia’s trillion-dollar-plus Neom project invited a select group of financiers, celebrities and influencers to a kickoff event at Sindalah Island, five kilometers off the kingdom’s west coast.

The Red Sea resort island, where an ecosystem is rising of super-luxury hotels, swank night clubs and an 86-berth yacht marina, hosted a beach party headlined by Grammy Award winner Alicia Keys. She sang to an audience that included actor Will Smith, tennis champ Rafael Nidal and former NFL quarterback Tom Brady.

Back in the capital, FII featured a bevy of investment bankers, hedge fund founders and corporate titans who are veterans of Davos and have become regulars at the Saudi conference, showcasing its aspirations for global influence.

Among the speakers on the main stage were bankers Larry Fink, Chairman and CEO of BlackRock; Ben Horowitz, co-founder of Andreesen Horowitz Jane Fraser, CEO of Citi; Ken Griffin, Founder and CEO of Citadel. Others included Dame Julia Hoggett, CEO of the London Stock Exchange; Ruth Porat, President and Chief Investment Officer of Alphabet and Google; and Ben Horowitz, co-founder of Andreesen Horowitz.
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The three-day event was introduced by Yasir Al-Rumayyan, who is Governor of the Saudi Public Investment Fund and Chairman of Aramco. Richard Attias, who hosts and produces the Saudi conference as CEO of the FII Institute, was earlier in his career producer of the WEF conference in Davos.

The Weekly Circuit: Dubai world summit draws AI stars + Davos wrap-up

👋 Hello from the Middle East!

This week, we’ve left the snow-lined streets of Davos and are taking a look at some of the prominent Middle East figures who made the trek to the World Economic Forum. Also simmering this week is continued concern about shipping risks on the Red Sea and curiosity about Kuwait’s new government cabinet. But first, who hasn’t RSVP’d yet for the World Government Summit next month in Dubai?

Artificial intelligence — and the chips that power the technology — are set to take center stage at the World Government Summit next month in Dubai. Slated to attend the annual gathering of presidents, prime ministers and business executives are OpenAI CEO Sam Altman; Jensen Huang, president of Nvidia Corp., and Yann LeCun, chief AI scientist at Meta. 

Altman is no stranger to the region – he is reportedly in conversations with Abu Dhabi-backed AI firm G42 amid efforts to raise billions of dollars to build a network of chip fabrication facilities. News of Altman’s negotiations come as the production of chips crucial to running AI applications is on track to fall short of growing demand. Meanwhile, California-headquartered Nvidia has faced export restrictions of its chips under U.S. regulations.   

The names of the 300 presidents and prime ministers attending the summit will be announced in the coming weeks, Mohammad Al Gergawi, Minister of Cabinet Affairs and chairman of the World Government Summit, said at a media briefing on Tuesday. Last year, Al Gergawi memorably interviewed Elon Musk at WGS. The fresh Twitter boss at the time promised to bring on a new CEO – which he did, hiring Linda Yaccarino a few months later. This year is shaping up to be another timely forum on the intersection of government and technology.

In Davos, Khaldoon Al Mubarak, CEO of Abu Dhabi’s Mubadala sovereign wealth fund, said the enormous amount of energy needed by data centers engaged in artificial intelligence work presents a “very important opportunity” for investors. 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.”

Ray Dalio, the billionaire founder of Bridgewater Associates, told a session in Davos of the Youth Majis at the Mohammed bin Salman Foundation, known as MISK, that the climate finance industry must recognize the need for investors to see a profit. “You have to understand who has the money. You have to be practical,” Dalio said. “Profit is a great motivator. If you inject those practicalities into it, I think you’re going to make a lot of progress.”

Egypt’s Suez Canal Authority, seeing revenues plunge as Yemen’s Houthi militia attacks ships in the Red Sea, said it will expand repair, maintenance and navigation services to help freight companies meet their schedules. The 154-year-old waterway, which connects the Red Sea and the Mediterranean, is a vital source of foreign currency for the debt-ridden Egyptian economy.

Bill Ackman, founder of New York-based Pershing Square Capital Management, and his Israeli-American wife Neri Oxman, have agreed to buy a 4.9% stake in the Tel Aviv Stock Exchange for about $17 million. The hedge fund billionaire was among the most vocal alumni who criticized former Harvard President Claudine Gay for not doing enough to fight antisemitism on campus, eventually leading to her resignation.

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].

LOOKING AHEAD

Q&A with Khalfan Belhoul, the investor and future fanatic shaping Dubai

Khalfan Belhoul leads the Dubai government agency tasked with shaping the future. Even he acknowledges he gets the question “what the heck does that mean?” quite a lot. 

Tech Training: The CEO of the Dubai Future Foundation leads a team of foresight practitioners, researchers and analysts to identify strategic sectors for investment in the medium and long term. The foundation’s remit includes future forecasting, regulation recommendations, technology training and events, a $300 million venture fund and fund of funds and, of course, the Museum of the Future – one of the biggest tourist attractions in Dubai. 

Flying Taxis: The Circuit’s Kelsey Warner caught up with Belhoul at the UAE pavilion along the Promenade in Davos to talk about the AI hype, what he got out of the WEF meeting – and when we can expect flying taxis in Dubai.

Click here to read the full interview.

THIRD PILLAR

Saudi-backed Ma’aden’s CEO Bob Wilt on the gold mine lying beneath the kingdom

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.

TAKING HELM: The Circuit spoke 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, interviewing him on the Davos sidelines. Wilt calls minerals and mining “the third pillar of the Saudi economy.”

Click here to read the full interview.

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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.

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. 

Middle East dominates the Davos conversation

👋 Hello from Davos!

The Middle East is front and center today as the World Economic Forum kicked off its line-up of global leaders answering questions about their toughest economic and geopolitical challenges. Up first was Qatari Prime Minister Sheikh Mohammed bin Abdul Rahman Al-Thani, who talked about the roots of the current Red Sea shipping crisis in the Gaza war and longstanding conflicts with Yemen’s Houthi rebels.

The regional problems have changed “how we view international trade, how we view international shipping, how interconnected we are from east to west,” the prime minister said. “Whenever something is happening in the Middle East, it’s affecting everyone.”

Also on the main stage today at Davos are Chinese Prime Minister Li Qiang, Ukraine President Volodymyr Zelensky, Jordanian Prime Minister Bisher Hani Al Khasawneh and Microsoft CEO Satya Nadella. Israeli President Isaac Herzog is scheduled to appear on Wednesday.

Outside the Davos Congress Center, black cars carrying VIPs were backed up on the snow-lined Promenade where groceries and retail stores have been replaced for this week by pop-up pavilions rented by dozens of businesses, media outlets and national agencies, including BlackRock, DP World, the Financial Times and Saudi Digital.

While diplomats may be dressed in hiking boots because of the icy sidewalks, many in town are carrying skis and snowboards as they head for the slopes, where a daily lift ticket goes for $98. By the numbers, Davos is hosting 60 heads of state and government officials, joined by 800 chief executives, with a total of 2,800 official participants. A couple of thousand more non-registered guests are on the prowl for deals and connections, some seen exchanging LinkedIn profiles and sipping oat milk flat whites in AI House (they’ve gone dairy-free), an old Swiss chalet retrofitted for the occasion. 

The Circuit’s Jonathan Ferziger and Kelsey Warner are on the ground in Davos to bring you the color and perspectives of all the world leaders and dealmakers as the meeting gets underway.