PIF looks to ramp up how much it can invest every year — and positions Saudi as a global AI hub

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WHAT WE’RE TRACKING TODAY

THIS MORNING: PIF looks to ramp up annual deployment capacity to USD 70 bn, positions Saudi as global AI hub

Good morning, friends. We hope you all had a fantastic long weekend and are looking forward to a productive week now that we have just two weeks to go before Ramadan.

This morning’s report should be a quick read — news flow was quiet over the Founding Day weekend.

WEATHER- Expect a strong breeze in Riyadh and Jeddah today with some rain in the cards— and there’s nothing but sunshine in store for folks in Dammam.

Riyadh: 27°C daytime / 14°C overnight
Jeddah: 29°C daytime / 22°C overnight
Dammam: 23°C daytime / 15°C overnight

MORNING MUST READ-

The Public Investment Fund (PIF) is ramping up its annual deployment capacity to USD 70 bn a year starting 2026, Bloomberg reports, quote what it said were remarks by fund governor Yasir Al Rumayyan at the FII Priority conference in Miami last week. This is a big step-up from its current annual spending clip of USD 40-50 bn. Some 25% will be earmarked for international investment, with c. 70% earmarked to drive economic growth and diversification at home.

Positioning Saudi as a global AI hub: “We are fairly well positioned to be an AI hub outside of the US,” said PIF Governor, adding that “AI will consume a lot of energy and we are the global leader when it comes to fossil fuel energy and when it comes to renewable energy,” Reuters reports

In context: PIF pumped USD 100 bn into the US economy between 2017 and 2023, creating 103k jobs, Al-Rumayyan added.

KUDOS- Our friends at EFG Hermes snagged Best Research House Award in 2023 for the second consecutive year at the Saudi Capital Market Forum 2024.

OIL WATCH-

#1- OPEC+ cuts are here to stay — at least through 2Q: OPEC+ is forecast to maintain its 2 mn bpd output trim into the next quarter in an attempt to balance out global oil markets against a backdrop of waning demand and rising US crude supply, according to a Bloomberg survey. Fourteen of the 17 traders and analysts surveyed by the business newswire expect the oil cartel to maintain the cuts, while three see the curbs being eased gradually.

What the pundits are saying: “They’ll have to extend their cuts,” Bob McNally, who leads consulting firm Rapidan Energy Group, told Bloomberg TV. “Supply is exceeding demand, and to keep prices stable, OPEC+ has to keep that oil off the market,” McNally said. “OPEC+ have no choice but to extend the current cuts in order to avoid a meltdown,” said Tamas Varga, an analyst at brokerage PVM Oil Associates.

#2- Adnoc Drilling could soon be drilling right into Saudi soil:Abu-Dhabi listed oil services company Adnoc Drilling is looking to expand its operations across the Middle East, including Saudi, Kuwait and Oman, Bloomberg reported last week, citing statements by its CFO Youssef Salem at a media briefing. It is investing USD 750-950 mn on rig procurement to cover deployment needs for target countries by the end of the year, he said.

On track: Adnoc Drilling has met the qualifications to compete for rig supply contracts in Oman and is currently in the process of obtaining approvals to participate in tenders here and Kuwait, according to Salem. Oil and gas operators in the GCC are the most attractive due to lower production costs and reduced emissions from pumping compared to other regions.

Background: Adnoc Drilling had intended to expand following its 2021 IPO, but prioritized domestic growth and deployment in Abu Dhabi, Salem said.

HAPPENING TOMORROW-

Big 5 Construct will open tomorrow and run until Thursday, 29 February. It will bring together industry players, government stakeholders and others for talks on the future of construction. It also sees the participation of 1.3k exhibitors from 47 countries. It

The event shares space with:

FM Expo Saudi, which will showcase the potential of the Kingdom’s facility management market;
Stone and Surface Saudi Arabia.

^^ Both co-located events will run until Thursday.

PSAs-

#1- We’re less than two months away until the Transport General Authority (TGA) starts rolling out an automated monitoring system to track truck and bus violations on the road, the TGA said in a statement last week. The system will watch for road violations as well as expired operating cards and other breaches of regulations. Cargo transport, international bus services, as well as truck and bus rentals fall under the scope of the system, which comes into effect on 21 April.

#2- The Zakat, Tax, and Customs Authority has issued a notice urging taxpayers to use invoice number (020) for accurate payment processing of all ZATCA dues, saying that the previous invoice number (030) has been discontinued, it said in a statement last week.

THE BIG STORY ABROAD-

The big story abroad is a USD 35 bn investment in Egypt by Abu Dhabi wealth fund ADQ, which bought the development rights to build a “world-class” finance and tourism hub on the Mediterranean coast for USD 24 bn. ADQ will invest a further USD 11 bn in “real estate and other prime projects” in Egypt, it said in a statement (pdf).

EnterpriseAM Egypt has the full rundown on the story. News of the investment saw the EGP strengthen on both the parallel and futures market. The Madbouly government, fighting a foreign exchange crisis, says it expects USD 10 bn in fresh cash within a week, setting expectations that the Central Bank of Egypt will soon go ahead with a devaluation.

Egypt is also making progress on an expanded loan from the International Monetary Fund. Together with the ADQ investment, the cash would cover its funding deficit for a four-year period.

MEANWHILE- Donald Trump has handily beaten Nikki Haley in South Carolina, her home state, as he continues to cruise to a rematch against Joe Biden in this fall’s election. The story dominates the front pages of the business and mainstream press around the world (Financial Times | Wall Street Journal | Politico | Reuters).

AND- There’s unrest at Goldman Sachs (“Goldman Sachs chief executive David Solomon is facing a new wave of unrest inside the Wall Street bank, threatening a fragile peace among its partners,” the FT writes) and a “crucial” meeting in Paris has revived talks of a ceasefire in Gaza, says the Wall Street Journal.

CIRCLE YOUR CALENDAR-

Riyadh will host the International Conference on Sand and Dust Storms in the ArabianPeninsulafrom Monday, 4 March to Wednesday, 6 March. The conference will address regional challenges caused by sand and dust storms and discuss monitoring systems, mitigation strategies, economic and infrastructural impacts, and more.

Tickets are on sale for the 2024 Saudi Arabian Grand Prix, scheduled for Jeddah from 7-9 March.

Riyadh will host a World Economic Forum special meeting on 28-29 April.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

PIF plans to acquire stake in Saudi Binladin Group

PIF wants in on Saudi Binladin Group: The Public Investment Fund (PIF) is planning to acquire a stake in the Kingdom’s largest construction conglomerate, Saudi Binladin Group (SBG), Bloomberg reported last week, citing sources it says are close to the matter.

What we know: The PIF is reportedly eyeing a chunk of or all of the Finance Ministry’s 36% stake in the construction giant, the sources said. It is working with Morgan Stanley on the potential transaction, they added.

Two-way benefits: The interest comes as the PIF looks to strengthen the domestic construction industry as the Kingdom pushes forward with the development of gigaprojects. The drive is taking on new urgency as we prepare to host both Expo 2030 and the 2034 Fifa World Cup. The potential acquisition could come as a lifeline for SBG’s recovery from years of losses and debt. It hired Houlihan Lokey in 2020 to advise on the restructuring of some USD 15 bn worth of debt

A key player: The SBG has been the Kingdom’s largest building contractor since it was founded in 1931. It helped build the King Abdulaziz International Airport, King Saud University, King Abdullah Financial District, King Abdullah Economic City, and Al Faisaliyah tower, among other projects, according to its website. It also helped with development and expansion works at the two holy mosques in Makkah and Madinah.

BACKGROUND- The PIF invested in a number of construction outfits last year, spending over USD 1.3 bn to acquire minority stakes in Nesma & Partners Contracting, ElSeif Engineering Contracting, AlBawani Holding, and Almabani General Contractors.

Alsulaiman Group to roll out 21 new Ikea showrooms, is investing in logistics and Circle K units

AlsulaimanGroup (ASG), the Ikea franchisee for Saudi Arabia, is set to open 21 new Ikea branches, bringing the total number of outlets here to 30 from nine today, ASG CEO Saud Alsulaiman told Argaam. The new stores will be located in major cities including Madinah, Makkah, Al-Qassim, Jazan, and Tabuk. Alsulaiman provided no further information on the pace or timing of the buildout and didn’t discuss the cost of the investment.

ASG is also planning to triple the size of its subsidiary logistics company Flow in the next five years with a view to expanding to other GCC states. Flow currently operates 13 warehouses and 300 delivery vehicles. ASG set up the unit in 2014 to support IKEA Saudi’s need for a dedicated supply chain and has since expanded to the UAE and Bahrain.

Circle K: The investment company is also the franchisee of convenience store chain Circle K and operates outlets in 40 gas stations, hospitals and libraries. ASG sees the brand expanding after contracting new gas stations including ADNOC and Petromin.

Alsulaiman also added that ASG is seeking to expand the footprint of Ehteraf, its real estate development services unit, to Abha, Makkah, and Al-Qassim. Ehteraf is currently operating in Riyadh and Madinah.

Basserah merges with Dubai-based AI startup Nybl

Local data automation firm Basserah is merging with Dubai-based AI startup Nybl, the two said in a statement last week.The transaction will see Basserah’s products, systems, and intellectual property consolidated under the Nybl brand. Basserah is a subsidiary of tech investment firm Nomd Holding.

Neither party put a value on the transaction and it isn’t clear how much Nomd owns in the merged entity. Nybl aims to expand regionally and globally by establishing a “vertically integrated data-AI pipeline,” according to the statement.

About Basserah: Founded in 2018 as a subsidiary of Nomd Holding, the startup helps industries like telecom, oil and gas and others to streamline operations through robotic automation.

Lucid remains in the black in 2023. PLUS: Results from Qassim Cement, Thob Al Aseel

LUCID-

Lucid Motors saw its net loss for 2023 come in at USD 2.8 bn, more than double the USD 1.3 bn it lost the year before, according to unaudited figures in its FY 2023 earnings release (pdf). Revenues dipped 2% y-o-y to USD 595 mn in 2023. For the fourth quarter, the automaker’s losses came in at USD 654 mn, against USD 473 mn in the comparable period.

Lucid is set to start the production of its recently unveiled seven-seater Lucid GravitySUV later this year with a price tag shy of USD 80k and has expanded its manufacturing plant in Arizona ahead of the launch. The PIF majority owned company is expecting to produce 9k vehicles this year, well below estimates of 22.6k, Reuters reports citing a Visible Alpha poll.

SOUND SMART: While the PIF shows no sign of backing away from Lucid, demand for EVs in the United States is softening. Rivian is also feeling the pinch, as is Tesla, and Mercedes-Benz says it won’t meet its 2025 goal of having EVs account for 50% of all sales.

QASSIM CEMENT-

Qassim Cement’s net income rose 9% y-o-y to SAR 142 mn in 2023, despite a decrease in sales, due to an increase in returns from financial investment returns and a fall in selling, marketing and general expenses, it said in a disclosure to Tadawul. Meanwhile, revenues declined 14% y-o-y to SAR 584 mn over the same period on the back of a fall in sales volumes and prices.

The company’s BoD approved the distribution of a SAR 58.5 mn for 4Q 2023 at SAR 0.65 per share, itsaid in a separate disclosure. Dividends can be cashed out on Thursday, 4 April.

THOB AL ASEEL-

Thob Al Aseel’s net income rose 44% y-o-y to SAR 77 mn in 2023, it said in a disclosure to Tadawul. Similarly, revenues were up 4.6% y-o-y to SAR 532 mn over the same period due to a 170% increase in sales from the company’s e-commerce outlets.

The company’s BoD also recommended a dividend payout of SAR 40 mn at SAR 0.10 per share for 2H 2023, it said in a separate disclosure. Eligible shareholders will be able to cash out the payments 15 working days post the 6 March due date.

Lots of fighting news, plus some football and horse racing

#1- FROM MMA AND THE BELLATOR-PFL MATCHES- PFL’s Renan Ferreira knocked out Bellator’s Ryan Bader in all of 21 seconds, taking home the main battle and preventing a clean sweep by Bellator fighters, who Bleacher Report says took all five bouts on the main card before Ferreira stepped into the ring.

Boxing heavyweights Mike Tyson, Francis Ngannou were in town to attend the inaugural PFL vs Bellator faceoff, the Associated Press reports. Ngannou is looking to make his PFL debut some time this year against Ferreira.

REMEMBER- Ngannou will go head to head against Anthony Joshua in a heavyweight boxing match in Riyadh on 8 March.

#2-PFL season is coming to Riyadh this summer: The Professional Fighters League (PFL) will kick off its inaugural season in the region this May with Riyadh hosting a number of events, founder and chair of the American MMA organization Don Davis told Bloomberg in an interview. “We will bring other big global mega events to Riyadh and Saudi Arabia,” Davis said, without providing further details.

The PFL is emerging challenger to the UFC:PIF-backed PFL is bidding to challenge the Ultimate Fighting Championship’s dominance of the industry. It has poured in USD 250 mn as part of its global expansion over the past five years and is working to set up regional leagues to boost competition, Davis said.

The PIF’s SRJ Sports Investment is all in: The PIF-backed sports fund has so far injected USD 100 mn into the PFL and is a 50-50 partner in the planned Middle East season, according to Davis.

#3- The first female MMA card ever to take place in the Kingdom went down yesterday, with two-time Olympic boxing gold medallist and world champion in three weight classes Claressa Shields defeating Kelsey DeSantis in a split decision in Riyadh, BBC Sport reports.

#4- Senor Buscador won yesterday theSaudi Cup 2024 — the world’s most valuable horse race with a prize purse of USD 20 mn. The six-year-old horse overtook Ushba Tesoro and the Saudi Crown.

#5- A last-minute own goal by Toma Tabatadze handed Al Ittihad a 2-1 victory over Uzbekistan’s Navbahor last week in the AFC Champions League. The own goal secured Al Ittihad’s spot in the quarter finals to clash with rival Al Hilal.

#6- The women’s national team bid farewellto the 2024 West Asian Football Federation (WAFF) in Jeddah after losing 2-0 against Guam on Friday.

More flights to China in the cards? Plus: Tourism, healthcare, manufacturing

AVIATION-

The General Authority of Civil Aviation (GACA) signed a MoU with China Civil Aviation Administration of China to boost air transport, GACA said on X last week. The MoU aims to expand the number of destinations between the Kingdom and China and drive the growth of air traffic, Al Eqtisadiah reported. It also aims to develop a cooperation framework in air transport and cargo.

Remember- The Kingdom was granted last year “approved destination status” (ADS) by China in a bid to facilitate the travel of Chinese tourists here. The ADS is an arrangement between the Chinese government and another country that allows for the travel of Chinese tourists to the country in tour groups. The ADS status could help the Kingdom lure in 3 mm Chinese tourists by 2030, Tourism Minister Ahmed El Khateeb said.

VENTURE CAPITAL-

+VC gets Saudi boost through Tawarif: Plus VC has signed an MoU that will see Tawarif work on speeding up the expansion of some of +VC portfolio startups into Saudi through its flagship Saudi Landing Program, they said in a joint press release.

TOURISM-

Al Akaria has inked a 25-year agreement with Marriott International, to brand, manage and operate a new 280-key hotel in Al Aqeeq district in Riyadh under the Autograph Collection brand, it said in a statement to Tadawul. The hotel is set to start operations in 2028. While the contract carries no fixed price tag, Marriott International will receive management and performance fee for its work.

EDUCATION-

Waja Company has signed a SAR 98 mn contract with the Education and Training Evaluation Commission (ETEC) to implement IT works for ETEC, it said in a disclosure to Tadawul. Waja was awarded the project back in December and it runs for 10 months.

HEALTHCARE-

ADX-listed Burjeel Holdings plans to open two specialized day-surgery centers in Riyadh in 2025, it said in a statement last week. The centers will offer oncology, advanced gynecology, orthopedics, and neurology services. It set CAPEX spend per center at between USD 30-40 mn each, with USD 10-15 mn as working capital investment per center, according to the statement. It expects the centers to generate SAR 150-200 mn in annual revenues.

INVESTMENT-

Tarahum and Al Rajhi Capital have launched Tarahum Endowment Fundafter receiving approval from the Capital Market Authority, state news agency SPA reports. The fund is set to generate non-for-profit development returns by investing in asset classes including real estate, and debt papers amongst other fixed income instruments.

REAL ESTATE-

More Ashaad units added to Alinma Hospitality Reit Fund: Alinma Hospitality Reit Fund reached an agreement with property investment firm Ashaad to include more of the latter's units in the fund, according to a disclosure to Tadawul last week.

MANUFACTURING-

#1-Arabian Cement to hand down delay damage penalty to Chinese contractor: Arabian Cement Co. (ACC) will impose a delay damage penaltyon EPC contractor China National Building Materials, Import & Export Corporation (CNBM) for delays in setting up its new cement mills at the Rabigh plant, it said in a disclosure to Tadawul last week. It attributed the delay to discussions between CNBM and its subsidiary Sinoma to hand over the outstanding project’s works, procurement plan and schedule and others.

Background: CNBM informed ACC in October 2022 of its failure to complete the project on time, prompting it to evaluate other offers for the completion of the project.

#2- New factory for Aslak in Al Kharj: United Wire Factories Co. (Aslak) inaugurated its new steel wires factory in Al Kharj Industrial City to cater for large projects related to Fifa World Cup 2034 and Expo 2030, it said in a statement to Argaam. It will have an initial production capacity of 90k tons annually and plans to raise it to reach 150k tons annually.

INFRASTRUCTURE-

Alkhorayef Water and Power Technologies has inked three contracts worth a combined SAR 285 mn with the National Water for maintenance works in water and sewage infrastructure in Damma, Makkah, and Taif, according to three separate disclosures (here, here and here). Two contracts run for 36 months, while the third runs for 60 months.

E-COMMERCE-

Amazon has reimbursed USD 1.9 mn to 700 contracted workers part of its Saudi operation for the collection of unlawful recruitment fees, it said in a statement. “Amazon found violations of its supply chain standards through an independent audit of a third-party licensed temporary labor agency” here, it said. The independent investigation also found “substandard living accommodations, contract and wage irregularities, and delays in the resolution of worker complaints,” it said. The company said it will roll out new controls to prevent issues in the future.

+VC ACC Al Rajhi Capital Alinma Hospitality Fund REIT ALSO ON OUR RADAR Arabian Cement Ashaad AVIATION CCAC China Civil Aviation Administration of China China National Building Materials Import & Export Corporation Education and Training Evaluation Commission (ETEC) Expansion GACA IT works mortgage Plus VC Real Estate Saudi Landing Program Sinoma Startups Taharum Endowment Fund Tarahum Tawarif The General Authority of Civil Aviation Waja Company

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PLANET FINANCE

Nvidia gains help S&P 500 hit fresh closing high

Nvidia’s valuation hits USD 2 tn: Nvidia continued its rally on Friday, with its valuation briefly hitting USD 2 tn for the first time ever. The US chipmaker made the biggest single-day market cap gain in history by adding USD 277 bn to its valuation on Thursday after its quarterly revenues rose 265% y-o-y on the back of a splurge in AI spending. The company’s shares have risen over 59% since the beginning of the year, “contributing to more than a quarter” of the S&P 500’s rise this year, Reuters reported.

SPEAKING OF- The S&P 500 and Dow Jones reached fresh highs on Friday as the AIcraze kept the rally going. “Nvidia is one of the key companies, if not the key company, for driving the Nasdaq and S&P 500 higher,” chief market strategist at Ameriprise Anthony Saglimbene told Reuters.

TASI	12,634.33	+0.2% (YTD: +5.6%)
MSCI Tadawul 30	1,628.17	+0.1% (YTD: +5%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	29,309.73	+0.1% (YTD: +17.7%)
ADX	9,279.94	-0.4% (YTD: -3.1%)
DFM	4,225.90	-0.1% (YTD: +4.1%)
S&P 500	5,088.80	+0.03% (YTD: +6.7%)
FTSE 100	7,706.28	+0.3% (YTD: -0.4%)
Euro Stoxx 50	4,872.57	+0.4% (YTD: +7.8%)
Brent crude	USD 81.62	-2.5%
Natural gas (Nymex)	USD 1.60	-7.5%
Gold	USD 2,049.40	+0.9%
BTC	USD 51,477.90	+0.9% (YTD: +118.5%)

THE CLOSING BELL-

The TASI rose 0.2% yesterday on turnover of SAR 8.6 bn. The index is up 5.6% YTD.

In the green: Amiantit (+9.8%), Al Baha (+7.1%) and Salama (+4.9%).

In the red: Gaco (-4%), Maharah (-3.3%) and Budget Saudi (-3%).

CORPORATE ACTIONS-

#1-Saudi Arabian Amiantit shareholders approved a 350% capital increase to SAR 445.5 mn through issuing bonus shares, it said in a disclosure to Tadawul.

#2- Room Trading’s BoD recommended a dividend payout of SAR 4.7 mn at SAR 0.75 per share for 4Q 2023, it said in a disclosure to Tadawul. Eligible shareholders will be able to cash out the payments 15 working days post the 3 May due date.

Saudi Fund for Development sign USD 55 loan agreement with Tunisia

#1- Tunisia has secured a soft loan worth USD 55 mn from the Saudi Fund for Development to finance the revitalization of railway infrastructure spanning 190 km for the transportation of phosphate, state news agency SPA reported.

#2- The Kingdom’s Ambassador to Canada Amal bin Yahya Al Muallami discussed the crisis in Gaza with the Council of Arab Ambassadors to Canada, state news agency SPA reported last week.

#3- Islamic Chamber of Commerce, Industry, and Agriculture (ICCIA) President Abdullah Saleh Kamel mulled potential investments by local companies in Malaysia during a meeting with Malaysian Prime Minister Anwar Ibrahim, Okaz reported last week.

CALENDAR

MARCH

2 March (Friday): end of Noor Riyadh show, segment “Refracted Identities, Shared Futures”, Riyadh.

4-6 March (Monday-Wednesday): International Conference on Sand and Dust Storms in the Arabian Peninsula, Riyadh.

4-5 March (Monday-Tuesday): Saudi Arabia Green Energy Week 2024, Riyadh.

4-6 March (Monday-Wednesday): Saudi International Digital Marketing and E-Commerce Expo 2024, Riyadh.

4-7 March (Monday-Thursday): LEAP 2024, Riyadh.

11 March (Monday): Flag Day (national holiday)

Signposted to happen sometime in March:

Ramadan

APRIL

14-21 April (Sunday-Monday): IMF and World Bank spring meetings, Washington, DC

28-29 April (Sunday-Monday): World Economic Forum’s Special Meeting, Riyadh.

29 April-1 May: Future Hospitality Summit at Al Faisaliah Hotel, Riyadh.

Signposted to happen sometime in April:

Eid Al-Fitr (national holiday)

MAY

19-21 May (Sunday-Tuesday): Saudi Energy Convention, Riyadh.

21-23 May (Tuesday-Thursday): The Saudi Food Show, Riyadh.

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

2-5 June (Sunday-Wednesday): Saudi Projects Show, Riyadh.

5 June (Wednesday): World Environment Day.

Signposted to happen sometime in June:

Eid Al-Adha (national holiday)

AUGUST

12-15 August (Monday-Thursday): The Saudi Food Expo, Riyadh

SEPTEMBER

11-12 September (Wednesday-Thursday): The Saudi Event Show, Riyadh.

23 September (Monday): National Day (national holiday)

DECEMBER

2-13 December (Monday-Friday): Conference of the Parties (COP16) to the United Nations Convention to Combat Desertification, Riyadh.

Signposted to happen sometime in 2024:

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