KAFD inches closer to offloading its district cooling business

Good morning, folks. We’re leading today’s packed issue by questioning whether the 2026 slump should be blamed on regional tensions or whether it is due to a deliberate structural reorganization. A contrarian (and bullish) take from TMF’s Saudi head reframes the slowdown as a growing pain, signaling a healthy, expanding economy.

PLUS- The government capped work visas for new firms at five, linking future visa availability to compliance with Saudization rates and 10 specific operational conditions.

PIF’s diet could cost consultants

Consultants are set to lose substantial revenue over the PIF’s strategy recalibration, and one stands to lose the most. Boston Consulting Group (BCG) could miss out on hundreds of mns of USD as the Public Investment Fund (PIF) tightens its budget, Bloomberg reports, citing unnamed sources. The fund is reducing its reliance on external advisers, with BCG expected to witness a stronger hit due to its sizable collaboration with PIF over the past few years.

Trimmed, but not severed: The PIF has not completely cut ties with consultants, with BCG still involved in some work linked to major developments, including Neom, the sources said. Meanwhile, despite the slowdown, giant consultants like BCG and McKinsey remain well-positioned in the region due to their growing exposure to the private sector.

It’s all part of the plan: The fund is adopting a more disciplined approach to megaprojects, shifting its focus toward profitable investments, strengthening local champions, and developing strategic sectors under its new strategy. The pivot comes as Saudi Arabia faces a widening fiscal deficit, geopolitical uncertainty weighing on foreign investment and oil exports, and a broader push to trim reliance on international deployments, limit volatility, and improve long-term stability.

Gulf’s cooling sector heats up

KAFD’s cooling assets are on sale: The King Abdullah Financial District (KAFD) is advancing talks to sell its district cooling business for USD 500 mn, Bloomberg reports, citing unnamed sources. The sale has already drawn competitive interest from UAE-based Tabreed as well as PIF’s own subsidiary Saudi Tabreed District Cooling Company, with Standard Chartered advising on the process.

Cooling projects are having a moment: In Riyadh, the Kingdom is preparing the Riyadhcooling project next year, which aims to decrease pavement and building temperatures by up to 15 degrees. Meanwhile, Qatar is looking to consolidate its own infrastructure, with state-backed Qatar Cool and Marafeq reportedly exploring a merger to create a local giant, Bloomberg says, citing people familiar with the matter. The industry is also heating up across the UAE, with Tabreed and CVC DIF acquiring Pal Cooling Holding last year in an AED 3.8 bn deal.

Data point

10.6% — that’s how much the Kingdom’s Operating Revenues Index rose y-o-y in April, according to Gastat’s Short-Term Business Indicators report (pdf). The annual increase was driven mainly by gains in mining and quarrying (22.5%), financial and ins. activities (14.2%), manufacturing (10.3%), wholesale and retail trade and motor vehicle repair (6.9%), and construction (5.4%).

ALSO- The Employees Compensation Index climbed 10.1% y-o-y, and issued building permits jumped 28.2% y-o-y.

Sports

Saudi Arabia lost 4-0 to Spain last night in their second match of the 2026 World Cup, with Lamine Yamal scoring Spain’s first goal of the match in just 10 minutes. Two more strikes by Mikel Oyarzabal were followed by an unfortunate own goal by KSA’s Hassan Al Tambakti. The Green Falcons will face Cabo Verde next Saturday at 3am.

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The big story abroad

Ongoing US-Iran peace talks in Switzerland have made “encouraging progress,” establishing a 60-day roadmap for a final agreement, mediators said. The parties agreed to set up a communication line for safe shipping through the Strait of Hormuz and a “de-confliction cell” with Lebanon to help maintain the halt in military operations.

Talks had looked incredibly fragile just hours earlier. US President Donald Trump threw a wrench into the negotiations, threatening to restart strikes and demanding Tehran stop Hezbollah from “causing trouble.” The Iranian delegation reportedly paused negotiations in response to Trump’s threats.

SpaceX flunks ESG metrics: Elon Musk’s SpaceX received the lowest possible environmental, social, and governance (ESG) rating from index provider MSCI, scoring a triple C. The report found that the company is “lagging its industry based on its high exposure and failure to manage significant ESG risks,” and is indirectly involved in one or more serious controversies.

Wars are changing the way VCs look at defence startups: Defence technology startups are attracting USD bns as investors flock to the sector amid drone-heavy wars in Ukraine and the Gulf. Sector companies have raised USD 12.3 bn from VC funds so far this year, already eclipsing last year’s full-year total of USD 10 bn.

It’s shaping up to be a boom year for the box office, with estimates now expecting US theaters to rake in some USD 4.5 bn this year, the highest figure since the Covid-19 pandemic six years ago, thanks to a string of blockbusters, the latest of which is Disney’s Toy Story 5.