Budget blowout

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Aramco helicopter goes down at Ras Tanura, killing 14

Good morning, friends. Today, we lead with Saudi Arabia’s full-year budget results — expenditures overshot, revenues undershot, and the deficit landed at more than twice what was planned at SAR 277 bn. Elsewhere, DataVolt is three months from financial close on its USD 500 mn Riyadh data center, and we break down how PIF’s new strategy was received around the world.

BUT FIRST- Terrible news from the Gulf Coast: An Aramco helicopter crashed in Ras Tanura yesterday, killing all 14 Saudi passengers on board, the Energy Ministry said. It’s still not clear whether the crash was linked to escalating hostilities between the US and Iran, and investigations are ongoing to determine the cause.

The oil giant resumed crude shipments from its Ras Tanura terminal on Friday after a four-month halt. The eastern coast terminal previously exported 5 mn bbl / d of crude and is home to the Kingdom’s largest domestic refinery, a 550k bbl / d facility that was temporarily shut as a precaution. Aramco’s last cargo from Ras Tanura was loaded for China on 8 March.

“The place to be” for infrastructure investors

Alvarez & Marsal expects revenue from its Saudi infrastructure advisory business to grow tenfold over the next three years as the Kingdom enters a new phase of infrastructure delivery, with regional disruptions expected to boost investment in logistics infrastructure and alternative trade routes. The growth forms part of an expansion plan launched after the company incorporated its regional headquarters in Riyadh in 2024, Helder Santos, Middle East and Africa head of infrastructure and capital projects, tells EnterpriseAM.

Recent regional disruptions are expected to drive additional investment in logistics infrastructure, including ports, rail corridors, and alternative export routes, while Saudi’s broader infrastructure plans remain on track, Santos says. “We truly believe that the Middle East, and specifically Saudi Arabia from an infrastructure and capital projects perspective, is going to be the place to be.”

A&M is advising two foreign infrastructure funds evaluating investments in Saudi Arabia, underscoring continued international investor appetite for the Kingdom despite recent geopolitical tensions, Santos says, while declining to identify the investors or disclose the size of the funds or their planned investments.

Delayed, again

Saudi Arabia and Egypt delayed the commercial start of their USD 1.8 bn, 3 GW electricity interconnection to the end of this year, pushing it to the back of their 2H 2026 target window, Shorouk News reports, citing a senior official from the Egyptian Electricity Ministry. The delay lands as Egypt braces for record summer consumption.

REMEMBER- The interconnection project — one of the region’s largest — is already years behind its original 2018 tender. Trial operations for the first 1.5 GW phase were initially advanced to April 2025 before slipping to early 2026. In February, the Egyptian government said the link would go live “within the coming weeks” — a target that has since come and gone.

Jabal Omar jumps on foreign sales

Jabal Omar Development is capitalizing on the new foreign property ownership laws, announcing plans to put more than 400 hotel residential units up for sale this year. The developer is also moving forward with the seventh and final phase of its namesake megaproject in Makkah, according to a Tadawul disclosure.

REMEMBER- The move follows the cabinet’s approval of regulations allowing non-Saudis to own real estate in designated zones, including the Jabal Omar project in Makkah. Ownership in the two holy cities stays confined to Muslim buyers.

Strong appetite for MSGA float

Riyadh-based real estate developer Masqa Investment (MSGA) saw its Nomu float oversubscribed by around 144.6%, according to a disclosure to Tadawul. The offering — representing 10% of the firm’s issued capital — was priced at SAR 6 per share. It was previously reported that the offer aims to raise SAR 66.7 mn, implying a post-listing market capitalization of SAR 667 mn.

Advisors: Yaqeen Capital served as the financial advisor and lead manager.

Against the grain: The subscription period ran from 17 to 24 June at a time when many major local players were hesitating or shelving their own IPO plans due to market volatility and geopolitical tensions.

Football federation chief steps down

Saudi football federation president Yasser Al Misehal has resigned after the national team’s early exit from the World Cup, he said in a statement. After holding the position for seven years, Al Misehal stepped down before the end of his term, saying that he bore “full responsibility” for the team’s failure to qualify for the tournament’s next round.

Not the only leadership change? The federation is also reportedly preparing to replace head coach Georgios Donis with former Al Hilal and Al Nassr manager Jorge Jesus.

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PSA-

Highlands face stormy days: The National Center of Meteorology is forecasting thunderstorms across high-altitude areas in Jazan, Asir, and Al Baha in the coming days.

The big story abroad

The US and Iran have reportedly agreed (once again) to cease strikes, following a spate of attacks over the weekend, with the two sides planning to resume talks in Doha tomorrow to resolve their dispute over the Strait of Hormuz. Hostilities reportedly reignited over contradicting interpretations of the MoU signed by both sides earlier this month to secure an interim peace.

Meanwhile, sovereign funds may be getting bolder: One-third of sovereign funds surveyed by US investment management firm Invesco say they plan to double down on riskier, unlisted assets like private credit, private equity, and infrastructure this year — around one-fifth want to reduce exposure to stocks. The trend dovetails into the AI-led paradigm shift in investment, as lenders pivot from concentrated stock markets to wagering on data centers and associated energy sources.

But… is private credit on a stable path? Major private credit players like Blue Owl, KKR, and Elliot Investment Management are pumping USD bns into buy now, pay later (BNPL) models, providing a major windfall to platforms like PayPal. While the credit sector continues to swell on the back of BNPL, auto, and student loans, it has been seen by some as incentivizing a dangerous uptick in consumer debt — not unlike the levels seen before the 2008 mortgage crisis.

Is defense heading towards mass production? Because standard US munitions are both costly and slow to manufacture, some defense contractors are developing modular workshops to rapidly produce affordable missiles during wartime. Defense group Co-Aspire has designed missiles that can be built with off-the-shelf parts in a bid to capitalize on major order requests from big US spenders, the Pentagon and US Air Force.

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THE BIG STORY TODAY

Budget deficit hits SAR 277 bn in 2025

The 2025 actual budget deficit exceeds projections: Saudi Arabia’s full-year budget deficit ballooned to SAR 277 bn (5.8% of GDP) in FY 2025, more than double the initially projected SAR 101 bn (2.3% of GDP), according to the Finance Ministry’s year-end budget performance report (pdf).

Expenditure surges, revenues drop: The widening fiscal gap was driven by an 8% surge in total expenditures to SAR 1.39 tn from initial budget projections, while total revenues fell 6.1% short of budget projections as well to land at SAR 1.11 tn.

The breakdown

Oil slide pulls down revenues: Total actual revenues fell due to a 10.1% decline in the other revenues category — which includes oil receipts — as Brent crude averages fell to USD 69.1 / bbl last year, compared to USD 80.5 in FY 2024.

Non-oil picks up on taxes: Non-oil revenues provided a partial cushion, rising 5.3% above budget estimates to SAR 505 bn.Tax revenues grew 2.5% to SAR 389 bn, supported by a 11.3% beat in income and corporate taxes (SAR 34 bn) and a 1.4% increase in taxes on goods and services (SAR 294 bn). Custom duties also ticked up 6.8% to SAR 24 bn on higher merchandise imports.

Opex surges on priorities: Operational expenditures overshot the budget by 10.8%, hitting SAR 1.22 tn. This overrun was driven by a 19.2% jump in goods and services spending to SAR 316 bn — funneled into state industrial, water, and tourism events — and a 56.3% spike in the other expenses category to SAR 134 bn to clear commitments under digital, AI, and green energy initiatives.

Capex slides on gigaprojects completion: Capital expenditure on non-financial assets dropped 8.3% below budget projections to SAR 169 bn. The drop is attributed to the completion of key infrastructure, transport, and giga-projects of major milestones and transitioning into operational phases. This includes projects such as the Riyadh public transport project, the completion of a large part of the Grand Mosque expansion, the rolling out of the first phase of Qiddiya, parts of the Red Sea Project, and the completion of the Red Sea International Airport.

The Kingdom took on heavy debts to plug the gap, leaving reserves untouched. Total funding activities hit SAR 402 bn — 69% raised domestically and 31% internationally — which covered the deficit, repaid SAR 38 bn in principal due, and funded SAR 60.4 bn in early debt buybacks. This left government reserves at Sama untouched and slightly up at SAR 399 bn by year-end. Consequently, the total public debt portfolio scaled to SAR 1.5 tn, climbing to 31.8% of GDP compared to the 29.9% originally estimated.

3

Tech

DataVolt nears USD 500 mn Riyadh financing

Data center developer DataVolt expects to reach financial close within three months on its USD 500 mn Riyadh East data center, after securing a leading AI provider as the anchor customer for more than 80% of the facility’s capacity, CEO Rajit Nanda tells EnterpriseAM. Banks are expected to finance around 75% of the project’s cost, Nanda says.

The details: The AI company committed to 36 MW of the site’s planned 44 MW capacity. The anchor commitment is expected to underpin financing for the project, whose first operational phase is scheduled to enter service by the end of 2026, with the remaining phases due by mid-2027.

“There is huge interest from international and Saudi banks,” Nanda says. “We are now [going] through a competitive process.”

Heading to Neom

Beyond Riyadh, DataVolt is in “advanced talks” with major Western data center companies to anchor the first phase of its 1.5 GW AI campus at Neom’s industrial city Oxagon, with construction expected to begin within two to three months of signing with a customer, Nanda says.

REMEMBER- The facility is being developed as an AI compute export hub serving customers in Europe and North America. The first 240 MW is expected to come online next year and represents about USD 2.5 bn of DataVolt’s investment, with the total value rising to about USD 10 bn once customer-owned computing infrastructure is included.

… and to Uzbekistan

Besides Neom, DataVolt expects all 60 MW currently under development to be operational by mid-2027, including a USD 250 mn, 12 MW facility in the Uzbek capital Tashkent that will serve Central Asia.

Nanda says DataVolt reached financial close on the Uzbekistan project last week, and intends to replicate that project-finance model in Saudi Arabia. “It is a small project, but it establishes and gives confidence now to the entire Global South in terms of a business model that can be banked,” he says.

About DataVolt: Founded in 2023 by Saudi infrastructure investor Vision Invest, DataVolt is chaired by former Acwa Power CEO Paddy Padmanathan, and is applying project-finance structures traditionally used in power and water projects to fund AI infrastructure.

What’s next? DataVolt expects 2026 to be its first profitable year. Nanda says there are no current plans for acquisitions, bond issuance, or public listing, although an IPO will continue to be evaluated as the business grows.

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Media

Gauging sentiment on PIF’s 2026-2030 strategy

The PIF’s 2026-2030 strategy announcement cleared the media test — mostly — driving a measurable shift in the fund’s media profile. Positive coverage rose 4 pp and negative coverage fell 7 pp in the period following the mid-April announcement, according to a webinar by media analytics firm Carma attended by EnterpriseAM.

Sentiment data skewed neutral to positive across the board, with 69% of regional outlets and 58% of international platforms reporting neutral coverage, while positive sentiment appeared in 38% of local outlets, 23% of regional platforms, and 13% of international media. Highly critical headlines were limited and concentrated in international coverage.

The dominant narrative — planned evolution, not crisis reaction — held, but not everywhere. Local and regional media overwhelmingly read the announcement as a proactive strategic shift. International media split roughly 50-50 between that reading and the counter-narrative — that the strategy was a reactive response to oil market volatility and US-Iran tensions. The wider investment audience is more likely to view it as a strategic adjustment rather than a failure, making it unlikely to become a lasting reputational challenge, Salient Communications CEO Sean Trainor said.

The sports angle drove almost all the negativity, and it was geographically concentrated. The UK, US, and Australia recorded the highest density of negative reporting, traceable directly to LIV Golf and speculation around Newcastle United. The LIV Golf criticism centered mostly on the league’s own performance and controversies since launch, however, not on PIF’s decision to review its involvement. The negativity resurfaced existing fault lines rather than opening new ones.

The LIV Golf narrative carries a specific risk, though. Carma noted that 90% of Fortune 500 CEOs play golf, making the decision-maker audience tracking this coverage disproportionately senior. Volume was low, but the influence of the audience watching was not.

Saudi’s priority sectors dominated the local narrative… Domestic prioritization, expansion, and economic resilience were the main themes in Saudi outlets, with AI, infrastructure, tourism, logistics, and renewables drawing the most positive reactions.

… while foreign outlets read the same shift differently. The reevaluation of Saudi soft power through sports investments was the overarching international narrative, even as those outlets viewed domestic prioritization positively. The main red flag that they raised was the strategy’s risks for global firms’ operations, questioning what the PIF’s capital optimization meant for foreign consulting firms and international talent.

The strategy announcement avoided a pattern PIF has fallen into before. Major Saudi initiative launches have historically been followed by silence — and silence fuels speculation. “If you have this vacuum after [an] announcement, then it just breeds cynicism,” Trainor said. This time, the 15 April announcement was the opening move in a sequenced rollout (Humain’s AI investments and the FIFA 2026 World Cup partnership among the proof points that followed), sustaining positive coverage momentum through May.

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ALSO ON OUR RADAR

SNB calls its USD 1.25 bn AT1, Cenomi picks its Al Khobar builder, Fakeeh Care gets a SAR 2.2 bn credit package

Saudi National Bank (SNB) will redeem its USD 1.25 bn Additional Tier 1 Sukuk in full on 26 July, it said in a Tadawul disclosure. The sukuk — 6.25k certificates issued in January 2021 at a par value of USD 200k per certificate — will be redeemed at face value plus any outstanding payments. The bank secured regulatory approval for the move. Citibank’s London branch is acting as principal paying agent.

REMEMBER- SNB has been active in capital markets this year. In January, it upsized its syndicated term loan to USD 1.5 bn from USD 1 bn after attracting 37 banks — with Chinese and Taiwanese lenders putting up nearly two-thirds of the facility, a sign of SNB’s push to diversify its funding base beyond traditional Western sources.

Lynx Contracting to build Cenomi’s largest Eastern Province mall

Cenomi Centers has selected Lynx Contracting to build its Al Khobar Downtown Mall and Boulevard project, signing an SAR 1.33 bn design-and-build contract, it said in a Tadawul disclosure. The scope covers design, engineering, construction, supply, installation, testing, and commissioning through to full handover, with a 36-month delivery timeline.

The contract is a related-party transaction: Chairman Fawaz Alhokair, Vice Chairman Salman bin Abdulaziz Alhokair, and Managing Director Kamel Alqalam all hold direct or indirect interests in Lynx. The relevant board members sat out the vote, and the contract will go to the General Assembly and regulator for approval.

REMEMBER- Cenomi had signed an agreement with PIF-owned Saudi Downtown Company in March to build its largest mall in the Eastern Province — with Cenomi responsible for selecting the contractors and engineers. Completion is expected three years after regulatory approvals come through.

Fakeeh Care loads up on credit

Fakeeh Care Group pulled in SAR 2.2 bn across two shariah-compliant credit facilities. Saudi National Bank is providing SAR 1.25 bn — SAR 1 bn long-term and SAR 250 mn short-term for treasury purposes — while Saudi Awwal Bank is contributing SAR 950 mn, split into SAR 800 mn long-term and SAR 150 mn short-term. Both facilities are secured against promissory notes only and earmarked for the group’s expansion and growth plans.

REFRESHER- The move follows Fakeeh Care’s recent antitrust clearance for its full acquisition of Al Fagih earlier this month.

A smoother path to the sandbox

The Saudi Central Bank (Sama) has updated its Regulatory Sandbox Service, automating and streamlining application submission, according to a statement. Driven by growing demand to test new fintech models under the bank’s supervision, the updated service is now available on the Sama e-services portal.

REMEMBER- The Sandbox Service is one of two initiatives that give fintech players the chance to trial digital financial solutions in a live environment, the other being the Capital Market Authority’s Fintech Lab.

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PLANET FINANCE

Bond investors are questioning the AI boom as spending heads toward USD 5.5 tn

Tech companies are raising equity like it’s the dot-com era again — and bond investors are getting nervous. Alphabet sold USD 85 bn of stock this month, while SpaceX followed its record USD 75 bn IPO with a USD 25 bn bond sale, Bloomberg reports.

Why the nerves? Companies that already generate strong cashflow are still raising fresh capital, suggesting they are preparing for heavier AI spending than investors had expected. OpenAI could pursue an IPO as soon as next year, while Anthropic and Meta are weighing equity raises. “It’s telling us that the amount of capital expenditure that they’re going to do is probably going to go up,” Columbia Threadneedle’s Tom Murphy said.

The bill keeps getting bigger: JPMorgan now expects AI and data center-related spending to reach USD 5.5 tn by 2030, up USD 400 bn from its November forecast. It also expects USD 2.1 tn of data center financing to be raised in high-grade bond markets over the next five years, up from USD 1.5 tn previously.

Bond markets are already blinking: SpaceX’s USD 25 bn bond sale weakened shortly after trading began, leaving investors with roughly USD 360 mn of paper losses relative to Treasuries, while spreads on US investment-grade tech bonds widened to 79 bps this month from 74 bps at the end of May.

The risk is duration as much as debt. Bondholders are being asked to take decades of AI obsolescence risk, with SpaceX and Nvidia both selling 20- and 30-year bonds this month and Alphabet selling 100-year GBP bonds in February. That makes the downside more awkward for credit investors: shareholders get the upside if the AI wager works, but bondholders are left holding the bag if it does not.

That is exactly the kind of risk the Bank for International Settlements (BIS) is worried about. The BIS warned in its annual report (pdf) that the AI boom is becoming increasingly reliant on debt and complex funding structures, while supply bottlenecks and intense competition could trigger the kind of overinvestment seen in previous boom-and-bust cycles.

The warning goes beyond AI: The BIS also flagged record public debt, sticky inflation risks, and fragile bond markets, warning of a new “sovereign-financial stability nexus” that could amplify shocks, Reuters reports. “Policymakers must act now,” BIS General Manager Pablo Hernández de Cos said. “Delay will only make the necessary adjustments more costly.”

MARKETS THIS MORNING-

Asia-Pacific markets are mixed in early trading this morning, as regional developments continue to weigh on investor sentiment. Japan’s Nikkei and South Korea’s Kospi are both down, while the Hang Seng is looking at gains. Over on Wall Street, stocks are set to open higher, with futures in the green.

TASI

10,908

-0.2% (YTD: +4.0%)

MSCI Tadawul 30

1,454

-0.3% (YTD: +4.8%)

NomuC

23,106

+0.4% (YTD: -0.8%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.25% repo

3.75% reverse repo

EGX30

50,344

-2.1% (YTD: +20.4%)

ADX

9,880

0.0% (YTD: -1.1%)

DFM

6,018

-0.1% (YTD: -0.5%)

S&P 500

7,354

-0.1% (YTD: +7.4%)

FTSE 100

10,508

-0.2% (YTD: +5.8%)

Euro Stoxx 50

6,222

-0.7% (YTD: +7.3%)

Brent crude

USD 72.48

+0.7%

Natural gas (Nymex)

USD 3.30

+0.6%

Gold

USD 4,080

-0.4%

BTC

USD 59,538

-1.1% (YTD: -32.1%)

Sukuk/bond market index

913.90

-0.1% (YTD: -0.6%)

S&P MENA Bond & Sukuk

152.60

0.0% (YTD: +0.5%)

VIX (Volatility Index)

18.41

-2.5% (YTD: +23.1%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.2% yesterday on turnover of SAR 2.5 bn. The index is up 4.0% YTD.

In the green: Mutakamela Ins. (+9.9%), Sfico (+9.9%), and Salama (+9.9%).

In the red: Al Mawarid (-4.0%), Arabian Mills (-3.6%), and Acwa (-3.0%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% yesterday on turnover of SAR 15.3 mn. The index is down 0.8% YTD.

In the green: Rawasi (+10.0%), National Building and Marketing (+9.8%), and Edarat (+7.6%).

In the red: Almuneef (-10.0%), Naseej Tech (-8.3%), and Multi Business (-7.9%).


AUGUST

30 August-1 September (Sunday-Tuesday): Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center.

31 August-3 September (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

8-10 September (Tuesday-Thursday): The WTM Spotlight Riyadh, Riyadh Front Exhibition & Conference Center (RFECC), Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

28 September-1 October (Monday-Thursday): The International Conference on Theory and Practice of Electronic Governance (ICEGOV), Prince Sultan University, Riyadh.

OCTOBER

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

28-29 October (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

28-29 October (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

NOVEMBER

11-12 November (Wednesday-Thursday): Aluminum Arabia, The Arena, Riyadh.

16-19 November (Monday-Thursday): Cityscape Global, Riyadh Exhibition and Convention Centre (Malham), Riyadh.

29 November-1 December (Sunday-Tuesday): The UN Trade and Development Global Supply Chain Forum, Riyadh.

Signposted to happen sometime in 2026:

2027

FEBRUARY

1-3 February (Monday-Wednesday): Energy Regulators Regional Association annual conference, Riyadh.

MARCH

21-25 March (Sunday-Thursday):The World Water Forum, Riyadh.

22–24 March (Monday-Wednesday): Capital Markets Forum, Four Seasons Hotel, Riyadh

APRIL

26-29 April (Monday-Thursday): World Energy Congress, Riyadh.

JUNE

1-3 June (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

Signposted to happen sometime in 2027:

  • The Ocean Race finishes in Amaala on the Red Sea;
  • Riyadh-Kudmi transmission line to be completed;
  • Aero Middle East and Sand & Fun takes place in Thumamah Airport, Riyadh.

Signposted to happen sometime in 2Q 2027:

  • The Hail Region Water Networks Project is expected to be completed.
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