Private sector drives 6.1% rise in Saudi capital investment for Q2

This sector saw an 8.2 percent increase, reaching SR255.9 billion, reflecting robust private-sector activity aligned with Vision 2030’s targets to boost private investment. File
This sector saw an 8.2 percent increase, reaching SR255.9 billion, reflecting robust private-sector activity aligned with Vision 2030’s targets to boost private investment. File
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Updated 05 November 2024
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Private sector drives 6.1% rise in Saudi capital investment for Q2

Private sector drives 6.1% rise in Saudi capital investment for Q2

RIYADH: Saudi Arabia’s gross fixed capital formation reached SR296 billion ($79 billion) in the second quarter of 2024, marking a 6.1 percent year-on-year increase, according to recent data. 

The Ministry of Investment attributed this growth primarily to the non-government sector, which holds an 86.45 percent share of total GFCF.  

This sector saw an 8.2 percent increase, reaching SR255.9 billion, reflecting robust private-sector activity aligned with Vision 2030’s targets to boost private investment. Conversely, GFCF in the government sector declined by 5.2 percent to SR40.1 billion.   

GFCF, which measures net investments in assets like infrastructure, machinery, and construction, is a key indicator of long-term economic potential, as it reflects capacity-building investments that drive productivity and growth. 

Saudi Arabia’s appeal as a top investment destination continues to grow, with the Ministry of Investment issuing 3,810 licenses in the third quarter — a 73.7 percent annual rise, excluding permits from the Tasattur anti-concealment initiative.  

This strong performance highlights the Kingdom’s successful positioning as a competitive market, driven by an increasingly stable and business-friendly environment, according to the report. 

The ministry’s October report, which aligns its data with the latest IMF guidelines, showed that Saudi Arabia’s foreign direct investment stock reached SR897 billion in 2023, a 13.4 percent increase from 2022.  

Excluding the one-time SR55 billion Aramco pipeline deal, the data showed that net inflows — representing the total new foreign capital coming into the country after accounting for outflows — also surged by 91 percent during this period, reaching SR86 billion. 

As Saudi Arabia pushes toward its goal of making FDI 5.7 percent of its gross domestic product by 2030, this upswing in foreign capital not only strengthens the Kingdom’s position as a global investment hub but also reinforces the ongoing expansion in GFCF, contributing to sustainable economic growth.  

Saudi Arabia has been advancing a range of initiatives to attract and deepen foreign investment, positioning itself as a hub for international business in the Middle East. 

One such measure, announced in 2021, requires foreign companies bidding for government contracts to establish regional headquarters within the Kingdom by 2024. 

This mandate has already encouraged major firms to set up shops in Riyadh, underscoring the Saudi government’s commitment to drawing long-term investment. 

The Public Investment Fund has also played a critical role in bolstering the investment landscape. 

Recently, PIF signed a memorandum of understanding with Brookfield Asset Management to become an anchor investor in Brookfield Middle East Partners. 

This private equity platform plans to raise $2 billion to invest in various high-growth sectors, such as technology, healthcare, and industrials. Additionally, at least half of BMEP’s capital will be allocated to Saudi-based companies, facilitating FDI inflows directly into the Kingdom. 

Another major win came with BlackRock, the world’s largest asset manager, which recently secured approval to establish a regional headquarters in Riyadh. 

This move is set to expand BlackRock’s Middle East operations significantly, reinforcing Saudi Arabia’ appeal as an investment destination for global financial firms. 


Aramco to increase borrowing, focus on dividend growth, CFO says

Aramco to increase borrowing, focus on dividend growth, CFO says
Updated 15 sec ago
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Aramco to increase borrowing, focus on dividend growth, CFO says

Aramco to increase borrowing, focus on dividend growth, CFO says

RIYADH: Saudi Aramco plans to increase borrowing and focus on enhancing its dividend distribution strategy, revealed the company’s chief financial officer. 

In an interview with Bloomberg, Ziad Al-Murshed explained that this move is part of the company’s efforts to optimize its capital structure. 

Aramco is considered one of the pillars of the Saudi economy, encompassing the entire oil production chain, from hydrocarbon extraction to energy generation, as well as refining and commercial distribution activities.  

“You’ll see us do a couple of things. One is, just take on more debt compared to use of equity,” Al-Murshed said during the interview. 

“It’s nothing to do with the dividend, it is optimizing our capital structure so that we end up with a lower weighted average cost of capital,” he added. 

Aramco returned to the debt market earlier this year after a three-year hiatus, raising $9 billion in two separate issuances. In June, it launched a $6 billion offering of dollar-denominated bonds, followed by a $3 billion issuance of Islamic bonds in September.   

The CFO noted: “We had the luxury of sitting out those three years until the market became conducive.” 

Al-Murshed provided insight into how the company increased its dividend by 4 percent in each of the past two years and is now paying over $81 billion in base dividends. 

“We’re looking for it to be progressive over the years,” he said, adding that the company’s free cash flow supports this strategy. 

While the company plans to issue debt regularly, Al-Murshed emphasized that it will not be overly frequent and revealed that Aramco has no plans to sell more debt for the remainder of 2024. 

“We want to be active, but we don’t want to be too active,” he said. 

The CFO further clarified that the company’s decision to sell debt is primarily aimed at broadening its investor base. 

Al-Murshed did not specify whether Aramco would borrow to support its dividend payments, which are set to total $124 billion this year, exceeding the company’s earnings. 

Earlier this month, Aramco reported a net profit of SR103.37 billion ($27.52 billion) for the third quarter of 2024, exceeding analyst expectations, which had projected a median net income of $26.9 billion. 

However, in a statement released at the time, the company noted a 15.4 percent decline in net profit compared to the same period in 2023, attributed to challenging market conditions, including lower prices for crude oil, refined products, and chemicals. 

Aramco’s vision remains to be the world’s leading integrated energy and chemicals company, operating in a safe, sustainable, and reliable manner.   


Saudi Arabia's Ma’aden proceeds with $10bn capital raise to boost phosphate stake

Saudi Arabia's Ma’aden proceeds with $10bn capital raise to boost phosphate stake
Updated 10 min 22 sec ago
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Saudi Arabia's Ma’aden proceeds with $10bn capital raise to boost phosphate stake

Saudi Arabia's Ma’aden proceeds with $10bn capital raise to boost phosphate stake
  • Ma’aden said its shareholders will convene virtually on Dec. 11 to approve the capital increase
  • Plan includes issuing 111 million new ordinary shares valued at SR10 each

RIYADH: Saudi Arabian Mining Co., or Ma’aden, has issued a shareholder circular outlining the terms of its plan to raise its share capital to SR38.03 billion ($10.1 billion) from SR36.92 billion to boost its phosphate business. 

The move follows an earlier announcement to acquire a 25 percent stake in Ma’aden Wa’ad Al-Shamal Phosphate Co. from Mosaic Phosphates B.V., increasing its ownership in the joint venture to 85 percent. 

In April, Ma’aden announced the signing of an agreement to acquire 210.93 million shares owned by Mosaic Co. and its subsidiary, Mosaic Phosphates B.V. Regulatory approval for the transaction was granted in November by the Capital Market Authority.

In a bourse filing, Ma’aden said its shareholders will convene virtually on Dec. 11 to approve the capital increase. The plan includes issuing 111 million new ordinary shares valued at SR10 each, representing a 3.01 percent rise in the company’s share capital. 

In exchange, Mosaic Phosphates will transfer its MWSPC stake to Ma’aden, aligning with the Saudi firm’s strategic expansion in the phosphate sector. 

MWSPC, established in 2014 and based in Turaif, is a joint venture between Ma’aden, Mosaic Co., and Saudi Basic Industries Corp. Following the transaction, SABIC will retain its 15 percent stake while Ma’aden strengthens its position as a global phosphate leader. 

Mosaic Netherlands Holding Co., a subsidiary of Mosaic Co., will receive the newly issued shares, which will be subject to a three-year lock-up period. Limited transfers will begin in the fourth year, with full tradability by the fifth year, the circular said. 

The acquisition will enhance Ma’aden’s control over MWSPC, recognized as a low-cost, large-scale phosphate producer. It will also grant Ma’aden access to Mosaic’s marketing rights, a component of the deal’s valuation at SR5.62 billion. 

Ma’aden expects increased earnings per share following the transaction, reflecting anticipated synergies and enhanced operational efficiencies, according to the document. 

The company assured shareholders that all regulatory approvals for the transaction have been secured, with a detailed timeline for procedural steps provided in the circular. 

The move underscores Ma’aden’s commitment to driving value creation in the Kingdom’s mining sector, aligning with Saudi Vision 2030 goals to diversify the economy and develop industrial capabilities. 

In the first half of this year, Ma’aden achieved a net profit of SR2 billion, marking a 160 percent increase compared to the same period in 2023. 

The surge in profitability was driven by several key factors. A major contributor to this financial success was the significant boost in sales volume, according to a Tadawul statement. 

The company’s robust performance in primary aluminum and gold sales played a crucial role in driving up revenues. Ma’aden also benefited from reductions in raw material costs and lower depreciation expenses, which further enhanced its profitability. 

Ma’aden’s performance and strategic advancements underscore its commitment to leading the mining sector and contributing to Saudi Arabia’s economic diversification goals, particularly in developing mining as a critical pillar of the Kingdom’s industry. 


Saudi Urban 20 delegation emphasizes need for frameworks to tackle development issues 

Saudi Urban 20 delegation emphasizes need for frameworks to tackle development issues 
Updated 21 November 2024
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Saudi Urban 20 delegation emphasizes need for frameworks to tackle development issues 

Saudi Urban 20 delegation emphasizes need for frameworks to tackle development issues 

RIYADH: Saudi Arabia emphasized the need for comprehensive strategic frameworks to tackle global economic, climate, and development challenges during the seventh Urban 20 Summit in Rio de Janeiro. 

A delegation led by Fahd Al-Rasheed, adviser to the General Secretariat of the Saudi Council of Ministers, participated in several key discussions at the event, highlighting the Kingdom’s urban development strategies and its commitment to sustainability, social inclusion, and economic empowerment on a global scale. 

Speaking about the country’s approach to urban transformation, Al-Rasheed said: “Saudi Arabia has adopted a comprehensive strategic framework for urban development and transformation that empowers city leadership to pursue the initiatives that drive their growth and success.” 

He also underlined that the U20, which unites cities from G20 member states, is vital in facilitating tools such as financing models to support cities in achieving their goals. 

Al-Rasheed gave those remarks during a panel discussion titled “Empowering Cities on their Own Paths to Development,” which included global urban leaders such as Edward Glaeser of Harvard University, Nasiphi Moya, mayor of Pretoria, and Kate Gallego, mayor of Phoenix. 

At the summit, Al-Rasheed also attended the launch of the first U20 book, a compilation of insights from global urbanists addressing shared challenges faced by metropolizes. 

His contribution, titled “Enlightened City Leadership: A New Model for a Sustainable Urban Future,” highlighted the importance of training city leaders to manage the complexities of modern urban administration. 

“Delivering on urban development imperatives requires comprehensive strategic planning that embraces governance, resourcing, and competitive advantage,” he remarked. 

Al-Rasheed pointed to projections that cities with populations exceeding 1 million will increase from 700 today to 1,600 by 2080. 

To meet the growing demand, he underlined that approximately 2 million urban leadership professionals will need to be trained over the next 35 years. 

“Urban development plans must include mechanisms to address pervasive issues, including poverty and social inclusion while preparing the next generation of city leaders to confront the deluge of challenges that cities will continue to face worldwide,” he said. 

The Urban 20 event in Brazil. Supplied

Al-Rasheed further explained that although many institutions offer training in disciplines such as urban planning, civil engineering, and public administration, there remains a lack of programs providing a comprehensive curriculum specifically focused on preparing city leaders to address both the technical and socioeconomic aspects of their roles. 

The U20 summit concluded with a closed-door session attended by Luiz Inacio Lula da Silva, president of Brazil, where Al-Rasheed reiterated the Kingdom’s commitment to sustainability and social equity in urban development. 

“We are proud to represent Saudi Arabia’s unique perspective and experience in urban development on this important global stage,” he said, according to press release, adding: “We look forward to continuing Saudi Arabia’s legacy of leadership at the Urban 20 and to continuing our work with urban leaders from around the world to unify city voices around common challenges.” 

Among the highlights of the delegation’s activities was a mayoral dinner co-hosted by Al-Rasheed and Eduardo Paes, mayor of Rio de Janeiro and chair of this year’s Urban 20. 

The event brought together more than 100 city leaders, including the mayors of major cities such as Paris, Pretoria, Helsinki, and Phoenix, to celebrate civic leadership and its impact on urban development. 

Representatives from multinational organizations, such as Anaclaudia Rossbach, executive director of UN-Habitat, also attended the gathering.

In his opening remarks at the dinner, Al-Rasheed said: “Mayoral leadership calls for a unique combination of abilities to anticipate and navigate future trends, including technological disruptions, economic shifts, and demographic changes, while demonstrating the social sensitivity to care for and improve citizens’ daily lives.” 

He added: “By convening senior city leaders from around the world to address the common challenges of urban development and city leadership, Saudi Arabia continues to demonstrate its commitment to global collaboration in the spirit of the Urban 20.”


British Airways reverses plan to axe Bahrain flights amid outcry

British Airways reverses plan to axe Bahrain flights amid outcry
Updated 21 November 2024
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British Airways reverses plan to axe Bahrain flights amid outcry

British Airways reverses plan to axe Bahrain flights amid outcry
  • Ex-UK defense secretary: Cancelation would have sent ‘totally the wrong message’
  • Decision to scrap Kuwait route remains ‘under review’

LONDON: British Airways has reversed a decision to scrap direct flights to Bahrain following a backlash, the Daily Mail reported.

However, flights to nearby Kuwait are still set to be suspended in March as part of previous plans aimed at tackling financially unviable flights at the airline.

Earlier this month, the Mail reported that BA had planned to cancel the Bahrain and Kuwait routes after almost a century of service.

The Gulf states have long had close ties to Britain, and the decision reportedly angered officials in Manama. Airline staff who served on the two routes were also set to lose their jobs.

Though the Kuwait route axing remains “under review,” the initial decision to cancel the Bahrain route would have sent “totally the wrong message” about the UK’s diplomatic stance toward the Gulf region, former Defense Secretary Liam Fox told the Mail.

Thousands of residents in Bahrain with close ties to the UK launched a petition demanding that the route remain available.

Bahrain hosts a Royal Navy base at Mina Salman Port, and the country has long had close commercial and trade ties with the UK.

BA said in a statement: “Following discussions with our partners and stakeholders, we can confirm we will operate a service between London Heathrow and Bahrain International Airport three times a week from the start of the summer 2025 season. This will increase to a daily service from the start of the Winter 2025 season.”

BA’s predecessor Imperial Airways first launched flights to Bahrain in 1971.

Manama became a key financial hub in the Gulf partly due to the presence of London-based Standard Chartered, which set up the country’s first bank in 1920.

Bahrain’s sovereign wealth fund, the Mumtalakat, owns McLaren, the UK luxury automotive manufacturer.

The fund plans to expand its British holdings through a series of investments, the Mail reported earlier this year.

The UK is also negotiating a free trade deal with the Gulf Cooperation Council, which includes Bahrain and Kuwait.

The six GCC countries combined represent the UK’s fourth-largest export market after the US, the EU and China.

Mohamed Yousif Al-Binfalah, chief of the Bahrain Airport Co., said: “We are delighted to witness British Airways continue operations at Bahrain International Airport.

“As the oldest airline operating out of Bahrain for over 92 years, the enduring partnership with British Airways is a testament to our shared commitment to excellence.”


Saudi GDP to receive $3bn boost after raft of deals at Local Content Forum

Saudi GDP to receive $3bn boost after raft of deals at Local Content Forum
Updated 21 November 2024
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Saudi GDP to receive $3bn boost after raft of deals at Local Content Forum

Saudi GDP to receive $3bn boost after raft of deals at Local Content Forum

RIYADH: Saudi Arabia launched initiatives and signed 15 agreements at the Local Content Forum, boosting domestic industries with an estimated SR12.4 billion ($3.3 billion) impact on gross domestic product. 

The deals, signed on the first day of the three-day event in Riyadh, span multiple strategic sectors, including manufacturing, technology, and transportation. 

The Local Content and Government Procurement Authority launched several initiatives aimed at driving the localization of key industries, aligning with broader economic goals. 

The agreements include partnerships designed to localize manufacturing, transfer knowledge, and foster innovation, the Saudi Press Agency reported. 

Key deals included:  

  • Two agreements with Saudi National Automotive Manufacturing Co. to localize and transfer knowledge for multi-purpose vehicles and light transport vehicles. 
  • Five agreements with NAFFCO for the localization of firefighting products, including dry powder extinguishers, trailer-mounted pumps, complete personal breathing devices, various types of fire extinguishers, and fire hoses. 
  • Agreements with Alfanar and Hewlett Packard Enterprise to localize and transfer knowledge for data center servers. 
  • A deal with InnovEra to localize manufacturing and knowledge transfer of directional devices. 
  • An agreement with Al-Salah Arabia to localize the manufacturing of bridge expansion joints. 
  • A partnership with Saffen Co. for the localization of oxygen sensor production. 
  • A deal with SAJA Pharmaceutical Co. for the production of “Empagliflozin.” 
  • An agreement with Coastal Co. to localize stadium seat manufacturing. 

Wattenha program 

Sadara Chemical Co. launched its “Wattenha” program, highlighting its contribution to Saudi Arabia’s localization efforts. The program aims to support domestic suppliers, develop human capital, and enhance manufacturing capabilities. 

In the first half of 2024, Sadara reported a local content rate of 50.25 percent, surpassing industry benchmarks, with SR3 billion spent on Saudi procurement.

Locally manufactured products made up 43 percent of its offerings, and Saudization reached 77.8 percent, according to a press release. 

A notable achievement is Sadara’s pipeline system connecting its facilities to the PlasChem complex, which supplies critical raw materials like ethylene oxide and propylene oxide, reducing costs and reliance on imports. 

Logistics and transportation 

Saudi Arabia Railways, in partnership with LCGPA, launched a SR15 billion Saudization program in the sector. This initiative, unveiled by Minister of Transport and Logistics Saleh Al-Jasser, aims to localize manufacturing, boost operational efficiency, and create up to 3,000 jobs by 2030. 

The minister emphasized that this program reflects the partnership between SAR and the private sector, in collaboration with the LCGPA, according to SPA. 

Automotive manufacturing 

The forum also highlighted the Kingdom’s plans for the automotive industry, including the goal to produce 500,000 vehicles annually by 2030. 

Ongoing negotiations with Hyundai underline Saudi Arabia’s commitment to becoming a hub for automobile manufacturing. 

The Global Supply Chain Resilience Initiative, valued at SR100 billion, is driving 95 strategic projects, with a focus on value chain development and export promotion. Additionally, three automotive manufacturing complexes were announced, furthering the localization of this critical sector. 

Diverse initiatives 

The forum featured discussions on the future of local content in industries such as agriculture, energy, and industrial services. Programs introduced by the LCGPA aim to reduce reliance on imports, enhance local supply chain resilience, and foster innovation. 

The “Golden Category” of the Made in Saudi program was also launched, aimed at integrating local suppliers into global supply chains and highlighting Saudi-made products on the world stage. 

The initiative, overseen by the Saudi Export Development Authority, promotes local products and supports exports. 

Minister of Investment Khalid Al-Falih emphasized that local content is a crucial driver of the economy, impacting key industries such as energy, industry, and tourism, among others. 

He highlighted that achieving growth targets requires a highly competitive investment climate, with the private sector playing a vital role in boosting the Kingdom’s exports while meeting the demands of its growing economy. 

Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef further emphasized the importance of locally produced products that offer high quality and competitive advantages as a key requirement for achieving local content goals and maximizing its economic impact. 

During his remarks at the forum, Alkhorayef stated that local content is one of the central pillars for achieving Saudi Arabia’s Vision 2030, as its development directly influences the execution of the initiative’s programs. 

Alkhorayef also discussed the significant role of the private sector in advancing local content development, noting that the LCGPA implements local content through fostering strategic partnerships and facilitating the Local Content Coordination Council. 

This council includes several major national companies, which have worked closely with the authority to increase local content in their operations and procurements.