Saudi Arabia’s venture ecosystem boosts MENA funding

Saudi Arabia’s venture ecosystem boosts MENA funding
Saudi Arabia has maintained its lead as the top destination for venture capital funding for the second consecutive month with its large-sized transactions. (SPA)
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Updated 06 January 2024
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Saudi Arabia’s venture ecosystem boosts MENA funding

Saudi Arabia’s venture ecosystem boosts MENA funding
  • MENA startups raised $2.2 billion across 488 deals in 2023

CAIRO: Saudi Arabia has solidified its position as a top destination for venture capital funding in the Middle East and North Africa thanks to a record-breaking end to 2023.

In December, the region witnessed an unprecedented influx of startup funding, amounting to $1.15 billion, according to Wamda’s monthly report in collaboration with Digital Digest.

This figure marks an 825 percent increase year-on-year and a 55 percent rise month-on-month. Significantly, $700 million of this sum was attributed to the debt round raised by the UAE-founded and now Saudi-headquartered fintech, Tabby.  

Excluding this substantial debt round, MENA startups raised $456 million in December alone, an 18 percent increase on November and a 253 percent rise on the same month of 2023.  

Overall, 2023 saw startups in the region secure $3.98 billion across 498 deals.

While this represents a marginal increase of less than 1 percent from 2022’s $3.95 billion raised over 802 deals, the picture changes when debt rounds are discounted.  

Excluding these, MENA startups raised $2.2 billion across 488 deals in 2023, compared to $3.45 billion across 786 deals in 2022, showing a significant 36 percent fall in deal value and a 38 percent drop in transactions.

The year 2023 also saw a 256 percent increase in the amount of debt raised compared to the previous year, totaling $1.77 billion.  

December’s deal-making activity demonstrated growth with 60 transactions recorded, a jump from November’s 49 deals.  

This increase was driven largely by an upswing in grants concentrated in the UAE, Saudi Arabia, and Lebanon, and the graduation of 19 startups from the Sanabil 500 Startup accelerator program and Techstars Riyadh. 

Saudi Arabia maintained its lead as the top destination for venture capital funding for the second consecutive month, primarily due to large-sized transactions by Tamra and Tabby. Egypt was a distant second, and the UAE came in third. 




Dutch travel tech company Jedo has acquired the Jump-in app, bolstering its market presence in the Kingdom and expanding its user base. (Supplied)

Fintech emerged as the dominant sector, with 25 deals exceeding $1 billion in funding, including Tabby’s debt round. Clean tech followed, with substantial funding rounds for Saudi Arabia-based secondhand e-commerce marketplace Soum and UAE’s Zeroe.  

Other sectors like health tech, educational tech, logistics, and mobility also attracted significant investor interest. Early-stage deals, primarily from accelerators, dominated the deal volume.  

Funding was notably skewed towards male-led startups, with less than 1 percent of deal value going to mixed founding teams or female-founded startups.

Key developments in December included four acquisition and merger deals, such as Pure Harvest’s acquisition of Red Sea’s production facility in Saudi Arabia and Maxab’s merger with Wasoko.  

In light of the UN climate change conference, COP28, held in Dubai, clean tech-focused initiatives gained momentum, including an accelerator program by PepsiCo, SABIC, AstroLabs, and a substantial climate tech fund from Investcorp.

As the MENA region continues to grow as a hub for innovative startups, Saudi Arabia’s leading role in this surge of investment activity is clear.  

The Kingdom’s thriving startup ecosystem and its ability to attract large-scale funding are pivotal in shaping the future of entrepreneurship and technology in the region.

Dutch travel tech Jedo expands to Saudi Arabia  

In a significant step towards global expansion, Dutch travel tech company Jedo has acquired the Jump-in app, marking its strategic entry into the Saudi market.  

The acquisition is a pivotal move for Jedo, significantly bolstering its market presence in the Kingdom and expanding its user base.  

By integrating Jump-in app’s unique capabilities, Jedo plans to digitize trip planning by embedding artificial intelligence technologies. This approach aims to offer more personalized and engaging travel experiences to users.

Jedo’s strategy involves close collaboration with key stakeholders, including Plug and Play and local tourism authorities in Saudi Arabia.  

This partnership is set to leverage technologies’ potential in reshaping the country’s tourism sector, catering to both local and international travelers with authentic and tailored experiences.

The Jump-in team is expected to play an instrumental role in shaping Jedo’s operational strategies in the Kingdom, as well as forging new partnerships and alliances.

With a dual focus on enabling Saudi residents to explore their own country and providing international visitors with genuine Saudi experiences, Jedo is dedicated to adapting and refining its platform to align with the cultural and consumer preferences of the Saudi audience.

The Jedo team is currently concentrating on customizing the platform to resonate more closely with the distinct characteristics of the Saudi market.  

UAE’s Phoenix Group acquires 25 percent of Lyvely

Phoenix Group PLC, a UAE-based firm specializing in cryptocurrency mining and blockchain, has expanded its portfolio by acquiring a 25 percent stake in Lyvely, a platform focused on social networking and content monetization.  

Founded in 2016 by Bijan Al-Izadehfard and Munaf Ali, Phoenix has been actively pursuing opportunities to diversify and enhance its presence in the digital landscape.  

The acquisition of a stake in Lyvely is aligned with this vision, offering a new avenue for growth.  

Lyvely, established in 2020 by Farah Zafar and Dave Catudal, is a UAE-born platform that has carved a niche in assisting content creators to monetize their online presence effectively.  

It also offers consumers unique and personalized experiences, bridging the gap between creators and their audiences.

Lyvely received an undisclosed amount in seed funding from Cypher Capital in August. This investment is earmarked for the development of a cryptocurrency token, signaling the company’s foray into the world of digital currencies and further expansion in the online content sphere.  

The partnership between Lyvely and Phoenix Group opens new areas of collaboration for both companies, offering new opportunities for growth in the digital content market.


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.


Closing Bell: Saudi main index rises to close at 11,864 

Closing Bell: Saudi main index rises to close at 11,864 
Updated 24 November 2024
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Closing Bell: Saudi main index rises to close at 11,864 

Closing Bell: Saudi main index rises to close at 11,864 

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 24.38 points, or 0.21 percent, to close at 11,864.90. 

The benchmark index recorded a trading turnover of SR4.22 billion ($1.12 billion), with 124 stocks advancing and 99 declining. 

The Kingdom’s parallel market Nomu also posted gains, climbing 345.06 points, or 1.13 percent, to close at 30,885.34, as 49 stocks advanced and 32 declined. 

The MSCI Tadawul Index increased by 4.74 points, or 0.32 percent, to close at 1,491.56. 

The best-performing stock of the day was Arabian Contracting Services Co., whose share price surged 9.97 percent to SR167.60. 

Other notable gainers included Saudi Reinsurance Co., rising 4.97 percent to SR45.45, and Saudi Public Transport Co., which climbed 3.98 percent to SR23.00.     

Al-Baha Investment and Development Co. led the decliners, falling 6.06 percent to SR0.31. Aldrees Petroleum and Transport Services Co. dropped 4.33 percent to SR123.60, and Batic Investments and Logistics Co. declined 3.23 percent to SR3.59. 

Leejam Sports Co. announced the opening of four new fitness centers. These include a men’s center and the first ladies’ center in Al-Rass city, Qassim Province, as well as the first men’s and ladies’ centers in Al-Qunfidah city, Makkah Province.  

Branded under “Fitness Time” and “Fitness Time - Ladies,” the centers will feature state-of-the-art facilities, high-spec sports equipment, and modern designs. 

The financial impact of these openings is expected to reflect in the fourth quarter of 2024. Despite the announcement, Leejam Sports Co. closed the session at SR180, down 0.34 percent. 

Obeikan Glass Co. reported a net profit of SR29.89 million for the nine months ending Sept. 30, a 58.3 percent drop from the same period in 2023. The decline was attributed to lower average selling prices due to global market conditions and increased administrative expenses related to a new investment in a subsidiary, Saudi Aluminum Casting Foundry.  

The stock ended at SR49.60, down 1.59 percent. 

United Mining Industries Co. announced the issuance of two exploration licenses for gypsum and anhydrite ore from the Ministry of Industry and Mineral Resources. The company plans to conduct studies to determine the availability of raw materials, with financial impacts to be announced upon completion.  

Its stock closed at SR39.60, up 0.26 percent.


Morgan Stanley receives approval to establish regional HQ in Saudi Arabia

Morgan Stanley receives approval to establish regional HQ in Saudi Arabia
Updated 24 November 2024
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Morgan Stanley receives approval to establish regional HQ in Saudi Arabia

Morgan Stanley receives approval to establish regional HQ in Saudi Arabia

RIYADH: US-based investment bank Morgan Stanley has been granted approval to establish its regional headquarters in Saudi Arabia, as the Kingdom continues to attract international investment.

This move aligns with Saudi Arabia’s regional headquarters program, which offers businesses various incentives, including a 30-year exemption from corporate income tax and withholding tax on headquarters activities, as well as access to discounts and support services.

Saudi Investment Minister Khalid Al-Falih confirmed the progress of this initiative in October, stating that the Kingdom has successfully attracted 540 international companies to set up regional headquarters in Riyadh—exceeding its 2030 target of 500.

“Establishing a regional HQ in Riyadh reflects the growth and development of Saudi Arabia and is a natural progression of our long history in the region,” said Abdulaziz Alajaji, Morgan Stanley’s CEO for Saudi Arabia and co-head of the bank’s Middle East and North Africa operations, according to Bloomberg.

Morgan Stanley first entered the Saudi market in 2007, launching an equity trading business in Riyadh, followed by the establishment of a Saudi equity fund in 2009.

This approval follows a similar move by Citigroup earlier this month, with the bank also receiving approval to establish its regional headquarters in Saudi Arabia.

Fahad Aldeweesh, CEO of Citi Saudi Arabia, emphasized that this development would support the firm’s future growth in the Kingdom.

Goldman Sachs, another major Wall Street bank, also received approval in May to set up its regional headquarters in Saudi Arabia.

Prominent international firms that have already established regional headquarters in Saudi Arabia include BlackRock, Northern Trust, Bechtel, PepsiCo, IHG Hotels and Resorts, PwC, and Deloitte.

In addition, a recent report from Knight Frank noted that Saudi Arabia's regional headquarters program has led to increased demand for office space in Riyadh, with the city’s office stock expected to grow by 1 million sq. meters by 2026.

In August, Kuwait’s Markaz Financial Center echoed this sentiment, predicting a significant uptick in the Kingdom’s real estate market during the second half of the year, driven by the regional headquarters program.


QatarEnergy strengthens global footprint with offshore expansion in Namibia 

QatarEnergy strengthens global footprint with offshore expansion in Namibia 
Updated 24 November 2024
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QatarEnergy strengthens global footprint with offshore expansion in Namibia 

QatarEnergy strengthens global footprint with offshore expansion in Namibia 

RIYADH: QatarEnergy has expanded its portfolio through a new agreement with TotalEnergies to increase its ownership stakes in two offshore blocks in Namibia’s Orange Basin. 

According to a press release, the state-owned energy firm will acquire an additional 5.25 percent interest in block 2913B and an additional 4.7 percent interest in block 2912 under the new deal, subject to customary approvals.  

Once finalized, QatarEnergy’s share in these licenses will rise to 35.25 percent in block 2913B and 33.025 percent in block 2912.  

Saad Sherida Al-Kaabi, Qatar’s minister of state for energy affairs and CEO of QatarEnergy, said: “We are pleased to expand QatarEnergy’s footprint in Namibia’s upstream sector. This agreement marks another important step in working collaboratively with our partners toward the development of the Venus discovery located on block 2913B.” 

TotalEnergies, the operator of both blocks, will retain 45.25 percent in block 2913B and 42.475 percent in block 2912. Other partners include Impact Oil & Gas, which holds 9.5 percent in both blocks and the National Petroleum Corp. of Namibia, which owns 10 percent in block 2913B and 15 percent in block 2912.   

Located about 300 km off the coast of the African country, in water depths ranging from 2,600 to 3,800 meters, these blocks host the promising Venus discovery. The Venus field has attracted considerable attention as a significant find that could impact Namibia’s energy future.  

This offshore acquisition complements QatarEnergy’s recent ventures into renewable energy. In October, the company announced a 50 percent stake in TotalEnergies’ 1.25-gigawatt solar project in Iraq.  

The initiative, part of Iraq’s $27 billion Gas Growth Integrated Project, aims to enhance Iraq’s energy self-sufficiency by addressing its reliance on electricity imports and reducing environmental impacts.   

The solar project, set to deploy 2 million bifacial solar panels, will generate up to 1.25 GW of renewable energy at peak capacity, supplying electricity to approximately 350,000 homes in Iraq’s Basra region.  

QatarEnergy will share equal ownership of the project with TotalEnergies, which retains the remaining 50 percent. 

The firm’s dual focus on traditional and renewable energy highlights its strategic approach to meeting global demands while addressing sustainability concerns.  

Its involvement in Namibia’s offshore blocks and Iraq’s shift toward renewable energy highlights a well-rounded portfolio that includes fossil fuels and clean energy investments.