Saudi Arabia’s PIF buys significant minority stake in Rocco Forte Hotels

Saudi Arabia’s PIF buys significant minority stake in Rocco Forte Hotels
The Rocco Forte Group currently operates 14 hotels and resorts, along with 20 private villas. Rocco Forte Hotels.
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Updated 04 December 2023
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Saudi Arabia’s PIF buys significant minority stake in Rocco Forte Hotels

Saudi Arabia’s PIF buys significant minority stake in Rocco Forte Hotels

RIYADH: Saudi Arabia’s Public Investment Fund has acquired a significant minority stake in UK-based Rocco Forte Hotels, marking a strategic move to enhance its presence in the hospitality sector.  

PIF stated that the agreement aligns with the sovereign fund’s global investment plans in promising sectors to secure long-term returns. However, it did not disclose the exact percentage of shares acquired in Rocco Forte Hotels. 

Turqi Al-Nowaiser, deputy governor and head of the International Investments Division at PIF, said: “Our investment in Rocco Forte Hotels reflects PIF’s confidence in both the commercial opportunity and the strength of the international hospitality and tourism industries that have shown remarkable resilience in recent years.” 

He added: “As active long-term investors, PIF will continue to invest strategically in promising sectors to achieve sustainable returns globally.”   

The fund also mentioned that the transaction is still pending regulatory approvals. 

According to a press statement, the Forte family will maintain majority ownership and control of the group, while the Italian entity CDPE Investimenti has exited the business post-deal. 

Rocco Forte, the executive chairman of Rocco Forte Hotels, expressed excitement about the hotel group’s partnership with PIF.

“They (PIF) share the same vision for the brand and the future strategy of the group, with the same ambition to take a long-term view. I look forward to working with PIF to expand the group and improve the high level of service we offer our customers,” said Forte.  

“We thank CDPEI for having shared the past fruitful eight years during which we both successfully accomplished the mission we shared when we started the journey, having significantly enhanced the value of the company and increased the group’s presence in Italy and across Europe,” he added. 

Founded in 1996 by Rocco Forte and Olga Polizzi, the Rocco Forte Group currently operates 14 hotels and resorts, along with 20 private villas. 

PIF, considered one of the wealthiest sovereign wealth funds globally, is at the forefront of Saudi Arabia’s economic diversification efforts, in line with the objectives outlined in Vision 2030. 

In November, PIF acquired a 10 percent stake in Heathrow Airport from the Spanish infrastructure giant Ferrovial.

In its October 2023 annual statement, PIF announced the establishment of 70 companies since its inception, with 25, such as Saudi Coffee Co. and Halal Products Development Co., founded in 2022.

In the same month, PIF also launched Tasaru, a company dedicated to developing local supply chain capabilities for the automotive and mobility industry in Saudi Arabia.  

The fund has also made several investments in the future mobility sector, including the establishment of Ceer, Saudi Arabia’s first national electric vehicle brand, in collaboration with Foxconn. Additionally, PIF has invested in Lucid Motors, a US-based company.


UAE banking sector sees 3.9% growth in deposits

UAE banking sector sees 3.9% growth in deposits
Updated 6 sec ago
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UAE banking sector sees 3.9% growth in deposits

UAE banking sector sees 3.9% growth in deposits
  • Aggregate loan-to-deposit ratio decreased by 0.3 percentage points

RIYADH: The UAE banking sector recorded a 3.9 percent quarterly increase in deposits during the third quarter, driven primarily by a 5.6 percent rise in time deposits, according to a recent report. This solid growth in deposits outpaced the 3.5 percent rise in loans and advances over the same period.

Retail borrowing was the key driver behind the loan growth, with retail lending increasing by 4.9 percent quarter on quarter.

However, profitability for the UAE’s leading banks declined, as impairment charges surged by 124.9 percent quarter on quarter, reaching 2.9 billion dirhams ($789.5 million), according to Alvarez & Marsal, a global professional services firm.

This sharp increase in impairments led to a 5.5 percent drop in net income, causing a contraction in return on equity by 223 basis points and a decline in return on assets by 16 basis points.

Asad Ahmed, managing director of financial services at Alvarez & Marsal, warned that the sector faces challenges amid shifting monetary policies and economic conditions.

“While lending growth continues, the sector faces challenges with higher impairment charges and cost efficiencies. The focus on digitalization and strategic cost management will be crucial for sustaining profitability and capital strength in the coming quarters,” Ahmed said.

He added: “As anticipated, the Central Bank of the UAE cut its benchmark interest rate by 50bps in Q3’24 to 4.9 percent, in line with the US Fed. Despite some headwinds, cues from management guidance indicate optimism on lending growth momentum to continue while impairments take a cautious outlook.”

The aggregate loan-to-deposit ratio decreased by 0.3 percentage points quarter on quarter, settling at 75.5 percent, as deposit growth outpaced loan growth.

Despite these challenges, total operating income grew by 3.5 percent quarter on quarter, driven by a 7.4 percent increase in non-interest income and an 11.8 percent rise in other operating income. Net interest income also saw a modest 1.5 percent increase during the same period.

Cost-efficiency metrics worsened during the quarter, with six out of the top 10 banks reporting higher operating expenses. The cost-to-income ratio rose by 99 basis points to 29 percent, as operating expenses increased by 7.1 percent, outpacing the 3.5 percent growth in operating income.

The cost of risk also worsened, rising by 30 basis points quarter on quarter to 0.6 percent. This marked a reversal from the second quarter, when the cost of risk had reached a multi-year low of 0.3 percent.

Total impairments rose significantly to 2.9 billion dirhams in the third quarter, compared to 1.3 billion dirhams in the second quarter.

Despite these challenges, the sector’s overall capital adequacy ratio remained strong at 17.9 percent, reflecting an increase of 0.37 percentage points quarter on quarter.


Investment strategies must align with SDGs to drive sustainable global growth, WIC hears

Investment strategies must align with SDGs to drive sustainable global growth, WIC hears
Updated 38 min 34 sec ago
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Investment strategies must align with SDGs to drive sustainable global growth, WIC hears

Investment strategies must align with SDGs to drive sustainable global growth, WIC hears

RIYADH: Investment strategies must be compatible with sustainable development goals to ensure economically viable and environmentally responsible global growth, a top official said at the World Investment Conference.

Speaking on the first day of the Riyad-based event, James Zhan, chair of the WIC executive board, said reforming the global financial system should be a priority alongside helping to deliver social and environmental reform.

The 28th WIC is being held from Nov. 25 to 27,  and will see global stakeholders gather to explore investment trends and how best to foster sustainable development. 

During a panel discussion titled “Impact Maximization: Leveraging Trade and Investment for Growth and Development,” Zhan said: “We need to embed investment strategies into the SDG implementation plans. We need to transform these international investment regimes into a kind of SDG promotion instrument.”

The SDGs are a set of 17 global objectives established by the UN to address pressing social, economic, and environmental challenges, aiming to achieve a sustainable and equitable future by 2030.

Zhan also called for transforming international investment: “We need to be practicing incentives for investment on the ground.”

Ibrahim Al-Mubarak, assistant minister of investment and CEO of the Saudi Investment Promotion Authority, outlined the Kingdom’s focused approach to investment. 

“Our investment strategy focuses on quality, FDI. That’s a very big word. So, what I like to call it is smart capital,” he said. 

Al-Mubarak also emphasized Saudi Arabia’s reform journey under Vision 2030, saying: “Since the launch of Vision 2030, we have set a very ambitious reform agenda. That reform agenda comes in various ways, be it in the reform of existing laws, launching new laws, removing subsidies.”

These reforms aim to bolster the Kingdom’s investment environment, which has already been recognized as the 16th most competitive economy globally, according to the IMD’s World Competitiveness Index.

Al-Mubarak highlighted the significance of comprehensive and consistent regulatory reforms in enhancing investment appeal. 

One measure of this is the success of Saudi Arabia’s Regional Headquarters Program, which came into effect in January and encouraged multinational companies to set up regional offices in Riyadh.

“We already have exceeded our target by having 550 regional headquarters companies here. Our location, our infrastructure, our youth are enabling us to achieve those (goals), but they have to be clubbed with positive, unified, consistent regulatory reform agenda,” Al-Mubarak said. 

The assistant minister highlighted that attracting investments requires groundwork, adding: “The promotion piece of investment is one thing, but the attraction is a much tougher one because it requires a lot more reforms and work on the ground, on the infrastructure, on the policies, on the procedures.”

Chairman of the Berlin Global Dialogue and Professor of Economics at the European School of Management and Technology Lars-Hendrik Roller called for a broader perspective on global investments. 

“The world is changing, and now I think we need to look eye level (at) Africa and other continents as well,” he said. 

He also cautioned about the interplay of foreign policy and national security with economic agendas, adding: “What is now overarching more and more (is) foreign policy and economic policy, national security issues. And I think we have to be very careful with that.” 

Roller pointed out the distorting effects of subsidies on global markets and stressed the urgency of private investments in the green economy, saying: “We’re not going to solve the climate crisis unless we generate a lot more private investment in the green economy.”


Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments

Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments
Updated 25 November 2024
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Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments

Saudi Arabia unveils world’s largest food park in Jeddah, eyes $5.3bn in investments

JEDDAH: Saudi Arabia has officially launched the Jeddah Food Cluster, a major project aimed at transforming the city into a global business hub with an investment target of SR20 billion ($5.3 billion).

Spanning 11 million sq. meters, the cluster is now recognized by Guinness World Records as the largest food park in the world by area. The development is expected to create over 43,000 jobs, driving both local and national economic growth.

The opening ceremony, held on Nov. 24, was led by Prince Saud bin Mishal, deputy governor of Makkah, under the patronage of Prince Khaled Al-Faisal, governor of the Makkah region. It was attended by high-ranking officials, including Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef.

The inauguration of the cluster aligns with Saudi Arabia’s Vision 2030, which seeks to strengthen food security, achieve self-sufficiency, develop food value chains, and establish the Kingdom as a regional hub for attracting both domestic and international investment in the food sector.

Located in Jeddah’s Second and Third Industrial Cities, the Jeddah Food Cluster is part of a larger industrial network in the Makkah region, which also includes industrial cities in Makkah and Taif. This region, which spans more than 50 million sq. meters, hosts over 2,000 industrial facilities specializing in sectors such as food production, pharmaceuticals, metals, and chemicals. The new food cluster is designed to enhance industrial productivity through cutting-edge infrastructure and strategic investments in key enablers.

Currently, the cluster houses 124 operational factories with investments totaling SR4.4 billion. These factories are estimated to produce around 4 million tonnes of goods annually across 10 industrial sectors and provide jobs for over 7,000 workers.

It also features 76 ready-to-use factories that comply with Saudi Food and Drug Authority standards. Additionally, the cluster has built a central laboratory to improve food quality and safety, as well as over 134,000 sq. meters of shared cold and dry storage facilities. By concentrating suppliers in one location, the cluster aims to create a sustainable, efficient supply chain.

The economic impact of the Jeddah Food Cluster is expected to be substantial, with national exports projected to increase by SR8 billion. The development is also anticipated to create thousands of job opportunities, particularly in the industrial and logistics sectors, and contribute approximately SR7 billion to Saudi Arabia’s GDP over the next decade. This aligns with the broader objectives of Saudi Arabia’s National Industrial Strategy and the National Industrial Development and Logistics Program, which aim to foster economic diversification and sustainable growth.

At the ceremony, MODON, the Saudi Authority for Industrial Cities and Technology Zones, announced that the Jeddah Food Cluster had achieved a significant milestone, receiving recognition from a global organization. Prince Saud also toured an exhibition showcasing the involvement of private companies and government entities in the food supply chain. This was followed by the presentation of the global recognition certificate.

Several memorandums of understanding and agreements were signed during the event. These partnerships, which include collaborations with Umm Al-Qura University, the National Academy for Industry, and Halal Products Development Co., focus on developing specialized training programs, improving food safety, and promoting quality control within the food industry.

Alkhorayef, in his speech, emphasized that the Jeddah Food Cluster represents more than just an industrial project—it is a key element in the Kingdom’s broader strategy for sustainable economic growth.

“Through this cluster, we aim to leverage the ministry’s capabilities to serve Jeddah, the Kingdom’s economic hub, and a prime investment destination,” he said.

He also highlighted the importance of connecting manufacturers, suppliers, and service providers to boost innovation and competitiveness, as well as to create new job opportunities, particularly for Saudi youth.

On the sidelines of the event, a panel discussion titled “The Future of Global Food Supply Chain Resilience for Innovation and Sustainability” was held, featuring industry leaders such as Abdullah bin Nasser Al-Badr, CEO of Almarai, Betty Ka, director of supply chain and delivery at the UN World Food Program, and Fabio Maia de Oliveira, general investment director at JBS Saudi Arabia. The panel explored strategies for building resilient and sustainable global food supply chains.

The launch of the Jeddah Food Cluster marks a significant step in Saudi Arabia’s ongoing efforts to diversify its economy and strengthen its position as a global leader in the food industry.


Oil Updates – prices ease but remain near 2-week highs on Russia, Iran tensions

Oil Updates – prices ease but remain near 2-week highs on Russia, Iran tensions
Updated 25 November 2024
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Oil Updates – prices ease but remain near 2-week highs on Russia, Iran tensions

Oil Updates – prices ease but remain near 2-week highs on Russia, Iran tensions

SINGAPORE: Oil prices retreated on Monday following 6 percent gains last week, but remained near two-week highs as geopolitical tensions grew between Western powers and major oil producers Russia and Iran, raising risks of supply disruption.

Brent crude futures slipped 26 cents, or 0.35 percent, to $74.91 a barrel by 7:40 a.m. Saudi time, while US West Texas Intermediate crude futures were at $70.97 a barrel, down 27 cents, or 0.38 percent.

Both contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since Nov. 7 after Russia fired a hypersonic missile at Ukraine in a warning to the US and UK following strikes by Kyiv on Russia using US and British weapons.

“Oil prices are starting the new week with some slight cool-off as market participants await more cues from geopolitical developments and the Fed’s policy outlook to set the tone,” said Yeap Jun Rong, market strategist at IG.

“Tensions between Ukraine and Russia have edged up a notch lately, leading to some pricing for the risks of a wider escalation potentially impacting oil supplies.”

As both Ukraine and Russia vie to gain some leverage ahead of any upcoming negotiations under a Trump administration, the tensions may likely persist into the year-end, keeping Brent prices supported around $70-$80, Yeap added.

In addition, Iran reacted to a resolution passed by the UN nuclear watchdog on Thursday by ordering measures such as activating various new and advanced centrifuges used in enriching uranium.

“The IAEA censure and Iran’s response heightens the likelihood that Trump will look to enforce sanctions against Iran’s oil exports when he comes into power,” Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia said in a note.

Enforced sanctions could sideline about 1 million barrels per day of Iran’s oil exports, about 1 percent of global oil supply, he said.

The Iranian foreign ministry said on Sunday that it will hold talks about its disputed nuclear program with three European powers on Nov. 29.

“Markets are concerned not only about damage to oil ports and infrastructure, but also the possibility of war contagion and involvement of more countries,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Investors were also focused on rising crude oil demand at China and India, the world’s top and third-largest importers, respectively.

China’s crude imports rebounded in November as lower prices drew stockpiling demand while Indian refiners increased crude throughput by 3 percent on year to 5.04 million bpd in October, buoyed by fuel exports.

For the week, traders will be eyeing US personal consumption expenditures data, due on Wednesday, as that will likely inform the Federal Reserve’s policy meeting scheduled for Dec. 17-18, Sachdeva said.
 


Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report

Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report
Updated 24 November 2024
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Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report

Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report

RIYADH: Saudi Arabia’s private debt market is experiencing significant growth, with eight active funds targeting to raise over $1.77 billion in capital by the third quarter of 2024, according to a new report.

This growth is driven by a sharp rise in investor confidence, with 97 percent of Middle East-based institutional investors now viewing the Kingdom as the most promising market for private debt in the coming year, up from 82 percent in 2023, based on Preqin survey data.

The report, titled “Territory Guide: The Rise of Private Debt Funds in Saudi Arabia 2024,” was published in collaboration with Saudi Venture Capital Co. It highlights the increasing interest from both regional and global investors, fueled by the positive outcomes of the Kingdom's Vision 2030 reforms.

The findings align with the fact that Saudi Arabia accounts for up to 27.5 percent of private debt fund transactions in the Middle East and North Africa region between 2016 and the third quarter of 2024.

In 2022, private debt funds focused on Saudi Arabia raised a record $335 million in total capital, a sharp rise from the $32 million raised by a single fund in 2003.

“This first-of-its-kind report highlights the emergence of private debt funds as a key asset class in Saudi Arabia, driven by the Kingdom’s Vision 2030 and its ambition to diversify the economy,” said Nabeel Koshak, CEO and board member at SVC.

“At SVC, we continue our commitment to support the development of such reports that provide policymakers, investors, and founders with insights and data to inform strategic decisions and policies to nurture the private capital ecosystem further,” Koshak added.

David Dawkins, lead author of the report at Preqin, commented: “Global investment firms are not alone in closely watching the growth and evolution of Saudi Arabia’s nascent private debt industry.”

Dawkins also noted: “For other developing economies in the Middle East and beyond, Saudi Arabia’s success in this area will strengthen the impetus for improving transparency to secure the capital needed for sustainable growth in a net-zero world.”

The study further revealed that among all private debt funds with investments tied to Saudi Arabia that concluded between 2016 and the third quarter of 2024, mezzanine funds accounted for 50 percent of total exposure, with direct lending and venture debt funds closely following at 30 percent and 20 percent, respectively.

Support for startups and small to medium-sized enterprises in the Kingdom is also reflected in the high proportion of venture debt, which represents 75 percent of all funds in the market with Saudi Arabia exposure.

The report also highlighted that private debt marked its second consecutive year as the asset class with the highest proportion of Middle Eastern investors intending to increase their investments in the coming year. Nearly 58 percent of investors expressed this sentiment, up from 50 percent in 2023.

The percentage of investors considering private debt the most promising asset class in the region rose by 12 percentage points, from 31 percent in 2023.

Private debt is expected to further bolster Saudi Arabia’s growing entrepreneurial community as the nation advances toward its Vision 2030 goals. Since 2018, new regulatory frameworks have been implemented, ushering in an era of increased transparency and equity within the private debt sector, closely aligned with the Kingdom’s broader investment vision.