Rasan looks to raise as much as SAR 841 mn in Tadawul debut

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Saudi Gigaproject Summit kicks off + Mohammed Hadi Al Rasheed wraps Nomu IPO

Good morning, wonderful people. We have a fairly packed issue for you this morning, with news of everything from a big fintech IPO to a heads-up to brace yourselves for tons of aviation news next week. Let’s jump right in:

HAPPENING TODAY-

The Saudi Gigaproject Summit will open today at the Hilton Riyadh Hotel and Residences. The Meed event will showcase Saudi’s USD 870 bn gigaproject drive. The Kingdom’s multi-bn USD pipeline of construction projects is changing the face of the country and creating significant room for the private sector as a catalyst for Saudi’s diversification away from oil.

The Middle East Poultry Expo opens in a few hours in the capital at the Riyadh International Convention and Exhibition Center. The Environment, Water, and Agriculture Ministry-sponsored event is the Kingdom’s largest event of its kind for the poultry industry. It wraps up on Wednesday, 15 May.

IN CONTEXT- Saudi is the Middle East and Africa’s top poultry producer and the third-largest consumer of poultry and meat products globally, according to the expo page.

WEATHER- There’s a chance of rain in Riyadh with a daytime high of 41°C and a low of 27°C. Makkah will be sunny today with a high of 42°C while the low is expected at 29°C. Meanwhile, Jeddah is looking windy with a high of 35°C and a low of 29°C.

HAPPENING THIS WEEK-

!_Anchor07_! More than 300 British companies will descend upon Riyadh tomorrow and Wednesday for Saudi Great Futures, a UK government-sponsored investment conference backed by our friends at HSBC.

Deputy Prime Minister Oliver Dowden will be leading the delegation as part of a year-long campaign that UK official hope will result in expanded “trade, tourism, education, and cultural activity.” Dowden is no stranger to the Saudi — the Tory MP spoke last fall at the Future Investment Initiative — check out his remarks here.

The pitch: “The Saudis have a respect and appetite for British intelligence, ingenuity, skills and experience from architecture to education, clean tech to AI, luxury to fashion and creativity to construction,” the event website declares. Dowden’s office notes that the “five lead gigaprojects” will see investment of c. USD 3 tn through 2030.

AND- It’s shaping up to be an important week for Saudi-US relations. US Energy Secretary Jennifer Granholm is due in town later this week, suggesting that talks are advancing on a pact that could see US support for the Saudi nuclear power industry. A nuclear energy pact is one of three cornerstone agreements (along with one on defense and a third on AI and advanced technologies) that could be part of a grand accord that sees us normalize relations with Israel.

Some in Washington are again speculating that Washington could aim to go it alone and conclude bilateral agreements with Riyadh on defense, AI, and nuclear power if Israeli Prime Minister Benjamin Netanyahu refuses to move on a clear path to statehood for Palestine — a key Saudi requirement for normalization. State-funded Voice of America is the latest to advance the idea.

ALSO THIS WEEK- Nasa Administrator Bill Nelson will be in Riyadh this week as part of a tour that will also take him to Italy. “Nelson will meet with Saudi Space Agency and other senior officials to discuss future collaboration and underscore the importance of civil space cooperation for the broader United States and Saudi Arabia relationship,” a Nasa statement reads.

WATCH THIS SPACE-

#1- Riyadh-based construction and mining firm Mohammed Hadi Al Rasheed wrapped up its IPO on parallel market Nomu yesterday, Argaam reports, citing a statement from the company’s financial advisor and lead manager Yaqeen Capital. Tadawul will set a listing date on Nomu following the completion of the necessary paperwork, the statement says. Subscription for qualified investors on a price range of SAR 22 to SAR 28 per share wrapped last Monday, 6 May. The company is going public with a 12% stake on the parallel market.

We have a solid IPO pipeline for Nomu: The parallel market’s pipeline includes school operator Horizon Educational which will wrap up its book-building process on Thursday. The Riyadh-based school operator is taking a 20% stake to market that could see it generate up to SAR 27 mn in proceeds. Other Nomu listings unfolding now include Riyadh-based advisor Yaqeen Capital (itself a top advisor on Nomu IPOs) with a 20% stake and Leaf Global Environmental Services with a 30% stake. Medical supplies outfit Qomel rang the bell on Nomu last week to mark the first day of trading on its shares. It took a 14.3% stake to the market.

#2- Local investors and businessmen were in Egypt for a show and tell on the New Administrative Capital, the Administrative Capital for Urban Development (ACUD) said in a statement yesterday. The delegation members met with ACUD Chairman Khaled Abbas, toured the city, and were briefed on its landmark projects and potential investments in the USD 58 bn development.

#3- The GCC is looking to reduce dependency on oil revenues with a comprehensive economic diversification strategy, GCC Secretary-General Jassim Mohammed Al Budaiwi said at the Gulf Creatives Conference at Harvard, according to state news agency SPA. The strategy was designed to build flexible economic structures among the GCC, as well as to lure in foreign direct investments, he said. Al Budaiwi also highlighted efforts to boost trade among the GCC, including the unified economic agreement, the Gulf Common Market, and a waiver of tariffs on products of GCC member countries.

#4- Madinah began the process of becoming the Middle East’s first autism-certified city by the US-based International Board of Credentialing and Continuing Education Standards, according to a statement. The push for certification comes under a partnership to develop the city’s landscape to help accommodate autistic folks and their families. The designation would help “ensure there are welcoming options for everyone” in Madinah, according to the statement.

DATA POINTS-

Saudi imported SAR 6.8 bn-worth of goods from other GCC countries in February, up 19% y-o-y, data from the government’s statistics agency Gastat (pdf) showed. The UAE accounted for the lion’s share of imports, making up 65% or SAR 4.4 bn of the overall GCC exports to Saudi. Oman came in second with SAR 1.3 bn worth of exports to the Kingdom in February, marking a 40% y-o-y increase.

Zooming out: China was the largest source market for imports to Saudi in February, with SAR 12.6 bn worth of goods, the data showed. The US came in second with exports of SAR 5 bn to Saudi.

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THE BIG STORY ABROAD-

It’s a reasonably quiet morning in the global business press, as is often the case on Mondays.

Some 300k Palestinians are on the move in Gaza after being forced out of Rafah by the Israeli army. “Many say they have nowhere to go,” writes the New York Times in the understatement of the year. Hamas troops, meanwhile, are pinning down the IDF in northern Gaza and other areas that the IDF had claimed to have cleared of the group, the WSJ notes.

CLOSER TO HOME: Kuwait’s foreign minister as well as its ministers of petroleum and finance retained their posts after Prime Minister Sheikh Ahmad Abdullah Al-Sabah formed a new cabinet just a couple of days after the country’s emir dissolved parliament.

ELSEWHERE- Shakeup in Russia. Russian President Vladimir Putin has appointed a civilian economist to run the Defense Ministry in a surprise shakeup.

THE WORLD THIS WEEK-

#1- Washington powerbrokers, lobbyists, and diplomats the world over will be watching closely as US Senator Bob Menendez goes on trial for allegedly taking “bribes to influence state and federal prosecutors to go easy on his associates, aid the government of Egypt and help seal a deal between an associate and an investment company led by a member of the Qatari royal family.” Politico and the New York Times have more. Menendez was chair of the Senate Foreign Relations Committee at the time of his arrest late last year.

#2- Arab League heads of state will gather in Bahrain on Thursday for a summit — one day after Nakba Day.

#3- Dueling reports: Opec’s oil report is out tomorrow, setting up its June production meeting, while the IEA’s monthly oil market report is due out Wednesday.

#4- The Cannes film festival gets underway and the US presidential campaign heats up: Prosecutors are hoping to finish presenting their case against Donald Trump in a hush money trial even as Agent Orange schedules a big fundraising event for tomorrow, and Joe Biden has a number of public events scheduled.

CIRCLE YOUR CALENDAR-

The MENA Construction Summit will kick off tomorrow at the Hilton Riyadh Hotel & Residences. Organized by Meed, the one-day event will bring together developers, contractors, key executives and others to discuss the latest innovations in the construction industry.

Red Sea Fashion Week will get underway on Thursday, 16 May and run until Saturday, 18 May at the St. Regis Red Sea Resort, according to state news agency SPA. The event, organized by the Saudi Fashion Commission, will feature an opening show on the first day, followed by two days of runway shows showcasing collections from both Saudi and international designers.

Riyadh will host the Saudi Energy Convention from Sunday, 19 May to Tuesday, 21 May. The convention will see energy and utilities industry leaders advance collaborative decarbonization efforts and identify innovation areas. It will also host the Saudi Utilities Convention and Saudi Hydrogen Convention to address the role and challenges of rolling out hydrogen, water and utility projects that are in line with the global energy transition. Over 10k energy professionals and 200 industry speakers will be present at the event.

The Future Aviation Forum will get underway on Monday, 20 May and run until Wednesday, 22 May at the King Abdulaziz International Conference Center in Riyadh. The event, organized by the General Authority of Civil Aviation, will see the Kingdom showcasing some USD 100 bn worth of investment options in the aviation and logistics sector at large.

Riyadh will host a Global AI Summit from 10-12 September, state news agency SPA reported yesterday. The event, which is organized by the Saudi Authority for Data and Artificial Intelligence, will focus on key AI topics and trends, delving into its local and global adoptions, ethics, and infrastructure.

Dammam will host the Saudi Maritime and Logistics Congress from Wednesday, 18 September to Thursday, 19 September. The two-day event looks to gather up to 10k attendees and 200 exhibitors, and will discuss topics including interlinked logistics, developments in supply chains, digitalisation, decarbonisation, the energy transition, and workforce development.

Rasan sets price range for Tadawul IPO

Fintech startup Rasan has set a price range of SAR 35-37 per share for its IPO on Tadawul’s main market, according to a statement (pdf). It is selling a 30% stake through an offering of existing and new shares. That range means Rasan could raise as much as SAR 841 mn from the IPO, and values the company at up to SAR 2.8 bn, according to our calculations.

Subscription to the IPO kicked off yesterday for institutional investors and will run until this Thursday, 16 May. Retail investors will have two days to place their orders starting Thursday, 29 May. The share sale sees Rasan offering 22.7 mn shares, including 17.4 mn shares from 15 selling shareholders and 5.3 mn news shares.

What’s next? The final allocation of shares will take place on Tuesday, 4 June, with any excess subscription fees set to be refunded by Thursday, 6 June. The first day of trading remains contingent on meeting fulfilling relevant regulatory requirements.

Use of proceeds: Rasan plans to use the proceeds to “expand the group’s current operations and products, market and develop the group’s new products, and finance the general purposes of the group,” it had said in its intention to float (pdf). A portion of the net proceeds — after deducting SAR 40.4 mn to cover IPO-related expenses — will be distributed to the selling shareholders on a pro rata basis.

REMEMBER- Rasan is a first mover in an industry with plenty of room to grow thanks to both the under-penetration of the industry and ins. industry targets in Vision 2030. Per the ITF: “Ins. penetration in the Kingdom, defined as gross written premiums as % of GDP, stood at 1.3% in 2022, considerably lower relative to regional markets (UAE: 2.5%, Bahrain: 1.7%) and even lower compared to the global average of 6.6%.”

ADVISORS- Saudi Fransi Capital is quarterbacking the transaction as financial advisor, lead manager, bookrunner and underwriter. Morgan Stanley Saudi Arabia is also acting as financial advisor, bookrunner, and underwriter. Receiving banks include Banque Saudi Fransi and AlRajhi Bank. Latham & Watkins is Rasan’s legal advisor, while White & Case was appointed as legal advisor to the lead manager, financial advisors, underwriters, and bookrunners. PwC is financial due diligence advisor and marketing consultant and EY is serving as auditor.

SAUDI IPO PIPELINE AT A GLANCE-

Among the transactions now in the market or expected soon:

Labor agency Saudi Manpower Company (Smasco) is selling a 30% stake;
Water treatment outfit Miahona has priced its IPO at the top of the range after recording strong investor appetite;
Dr Soliman Abdul Kader Fakeeh Hospital looks set to become the largest IPO so far this year;

Budget airline Flynas is reportedly looking to go public this year;

PIF-backed lender Riyad Bank is considering the listing of its investment banking arm Riyad Capital ;
Hotels and resorts operator Boudl has filed to go public;

Fourth Milling Company will list before the end of June;
Singapore’s Olam Group is mulling the IPO of its Olam Agri subsidiary on Tadawul;
Hypermarket operator Lulu is said to be eyeing a dual listing on Tadawul and ADX;
Aster DM Healthcare looks set to spin-off its GCC assets and seek a dual listing on Tadawul and in the UAE.

The Future Aviation Forum + ICAO Global Summit get underway next week

Riyadh is hosting two major, overlapping aviation events next week: The Future Aviation Forum (FAF) — where investment projects worth USD 100 bn will be up for grabs — and the International Civil Aviation Organization’s (ICAO) Facilitation 2024 Global Summit. The FAF is set to run from Monday, 20 May, through to Wednesday, 22 May, while the two-day ICAO summit is scheduled for kickoff on Tuesday, 21 May. Both events will be hosted at the King Abdulaziz International Conference Center.

Some 5k aviation executives from aviation majors including Boeing, Airbus, China’s Comac, and Embraer, along with industry experts, manufacturers and government officials are expected to arrive in the capital for both events. The FAF will be hosted and run by the General Civil Aviation Authority (Gaca).

In context: The events are part of the Kingdom’s aviation strategy, which the government hopes to turn into a USD 2 bn industry, and the country’s extending air connectivity to a total of 250 countries by 2030. FAF — headlined “Elevating global connectivity” — is expected to see the government draw back the curtain on how it plans to achieve these goals. This also plays into the government’s tourism target, which was more than doubled aiming to lure 150 mn tourist trips by 2030, after hitting an earlier target of 100 mn last year ahead of plan.

The breakdown potential investments on the table: Some USD 50 bn are earmarked for local airport development, and USD 40 bn for new aircraft orders, according to state news agency SPA. Some USD 5 bn are reserved for setting up special logistics zones in some of the airports in Riyadh, Jeddah, and Dammam, and the remaining USD 5 bn will be channeled towards other aviation-related projects.

On the agenda for FAF: Air mobility, travel safety, sustainable jet fuels, digitization, and the use of AI. You can check out the full agenda (pdf) here and watch the event live here or register to attend here.

MEANWHILE- ICAO’s summit will focus on facilitation measures that make it easier and quicker for passengers, cargo, and aircrafts to move across international borders. This includes strategies to improve services for persons with disability and elderly, and innovation to improve traveler experiences. Here’s the preliminary agenda (pdf).

Among the prominent speakers at both events include:

Transport and Logistics Minister Saleh Bin Nasser Al-Jasser;
GACA President Abdulaziz Bin Abdullah Al-Duailej;
CEO of Riyadh Air Tony Douglas;
CEO of Flyadeal Steven Greenway;
CEO and Managing Director of Flynas Bander AlMohana;
ICAO President Salvatore Sciacchitano;
ICAO’s Secretary General, Juan Carlos Salazar;
CEO of Wizz Air József Váradi;
Director General of Global Express Association Carlos Grau Tanner;
CEO of Flydubai Ghaith AlGhaith;
Riyadh Airports Company CEO Ayman Abdul Aziz AboAbah;
US Department of State official Callan Thomas;
Canadian Transportation Agency Chairperson and CEO, France Pégeot;
Finnish Immigration Service CTO, Christopher Bonn;
UN’s Countering Terrorist Travel Chief, Christine Bradley.

Saudi Film Commission takes over from General Authority of Media Regulation as regulator of the Kingdom’s burgeoning film industry

The Saudi Film Commission will now be tasked with issuing licenses and permits for the film industry instead of the General Authority of Media Regulation, the commission said in a post on X yesterday. Its scope of work will include licenses for the production of films and series, the operation of studios, and distribution of foreign movies. It will also issue licenses for operators to run permanent, temporary, and specialized cinemas.

The rationale: The transfer of competence to the Film Commission comes as part of its key role in developing the industry’s value chain. You can explore the licenses on offer through the Abde’a platform here.

It’s all to drive demand: The Film Commission approved last month imposing a lower sales tax on the sale of tickets at the local box office, in a move it said will help encourage private cinema operators to reduce ticket prices and drive demand. The commission approved slashing licensing fees levied on operators to run permanent, temporary and specialized cinemas.

Taqeem proposes regulations on real estate appraisal services

The Saudi Authority of Accredited Valuers (Taqeem) is out with two proposed sets of regulations related to real estate appraisal services, including rules on the real estate appraisal process as well as guidelines on who can be accredited as an appraiser. The breakdown:

REAL ESTATE APPRAISAL-

Regulations (pdf) on real estate appraisal services set out the framework. They’ve been put up on the government’s survey platform, Istitlaa, for public consultation until Monday, 20 May.

A look at requirements for eligibility: Appraisers or relevant partners must obtain a fellowship certificate from Taqeem in real estate appraisal. They need 20k hours of experience registered on the authority’s electronic platforms and have no less than five of the authority’s members on board of the real estate appraisal entity. Their license should be valid for at least 120 days.

All applications for registration would be submitted online through the authority’s dedicated Qaym platform, and the relevant department must take a decision on the application for no more than 15 days. Taqeem will compile a list of qualified appraisal entities which will be updated periodically.

A specialized Taqeem department could suspend accredited appraisal entities from receiving requests through Qaym if they fail to meet these terms. Suspension of orders could also occur in case of accredited appraisers requesting the halt of orders or reaching the maximum allotted number of daily orders. Orders for entities could also be paused if they take too long to complete requests or respond to objections.

Appraisals are not set in stone, and financial institutions (think commercial banks and finance firms under Saudi Central Bank supervision) could reject an appraisal report if the appraising entity fails to submit it within three days after it was due or respond to comments by financial institutions on the report within two working days of their submission. They can also be rejected in case multiple reports of the same real estate asset show a 15% discrepancy in value between submitted reports.

Fines + penalties: Appraisers can face fee cuts of 10% of the agreed upon fee in the case of delays, which rises in increments of five percentage points each day to a maximum of 20% if the report is delayed by three days. Failure to submit reports after will see requests assigned to another appraisal entity within the platform who will be paid through the originally tasked appraiser’s financial dues from Taqeem. Multiple infractions by the same appraiser will result in its exclusion from the platform, and will only be able to re-apply after 180 days from the date of their exclusion.

An accredited appraiser will be permanently excluded from the platform in the event of:

Being found in violation of the provisions more than once in the same year by a committee tasked with considering irregularities;
Providing services to financial institutions outside of the platform;
Hiring people who aren’t cleared to execute appraisals through the platform;
Enlisting a beneficiary or property owner to inspect and photograph the real estate asset subject to appraisal;
Disclosing a client's information;
Appraising an asset in a situation where there is a conflict of interest;
Assigning assessment tasks to others off the books;
Being found guilty of fraud, manipulation, and other gross violations.

Financial institutions are responsible for submitting the necessary documents for each appraisal request through Qaym. They should also ensure that there is no influence on the appraiser that might compromise their independence or decision and are required to address remarks from the appraiser within a maximum period of five days and review reports within 10 days at most.

Minimum fees for appraisal services provided to financial institutions are determined by Taqeem’s CEO, the rules showed. The fees are set depending on appraisal entities fulfilling regulatory compliance and occupational requirements. Fees are disbursed to appraisal entities through Qaym on a monthly basis after they are paid by financial institutions. They will be paid out through Qaym within up to 15 days from the completion of payment.

PROFESSIONAL CERTIFICATES-

Taqeem is also seeking the public’s opinion on another set of rules (pdf) regulating obtaining professional certification for accredited appraisers. Applicants, who will be put through qualification programs by the authority, should be Saudi nationals and hold a minimum of a high school degree.

The rationale: The regulations aim to unify the policies and procedures for obtaining certificates for the appraisal of real estate, machinery, equipment and movable property, as well as vehicle damage inspection. They also target meeting market needs for specialized personnel in the industry. They are up for public consultations on Istitlaa until Thursday, 16 May.

Neom is hiring everything from builders to marketers

Neom is seeking fresh hires: Recruitment remains at full speed at Neom, with some 246 job openings, its website showed. The openings range from typical contractor jobs related to the ongoing construction of the USD 500 bn development to marketing positions to promote the city in Europe and elsewhere.

Background: The hiring spree comes as Neom embarked on a drive to assure contractors and bankers that the buildout of the city was proceeding on schedule after reports of the government scaling back the project. Neom also recently came off the road in China with officials looking to rally interest from Hong Kong, Beijing, and Shanghai. It is looking to diversify its funding sources away from PIF, which has poured most of the funding into the project in the form of equity. Last month, Neom secured a fresh revolving credit facility worth SAR 10 bn from local banks to help it meet short-term financing needs. It is reportedly planning a SAR-denominated bond sale in what could be its first-ever sukuk sale.

The pitch: Economy and Planning Minister Faisal Alibrahim said last month that gigaprojects like Neom will be delivered at their intended scale in a way that satisfies the market and investors and ensures optimal economic growth for the Kingdom. However, he stressed that the government is being cautious not to “overheat” the economy to fund the projects.

The 1Q earnings season is in full swing

SAUDI ELECTRICITY COMPANY-

Saudi Electricity Company (SEC) reported net income of SAR 897 mn in 1Q 2024, rising 87% y-o-y, according to its disclosure to Tadawul. The company’s revenues rose 18.5% y-o-y to SAR 15.9 bn over the same period.

Strong performance: SEC attributed the growth to booking more business, higher returns on investment, lower financing costs, and holding less provisions for receivables. This has resulted in a 178% increase in total comprehensive income to SAR 1.2 bn last quarter. SEC spent SAR 10 bn in capex, a 48% y-o-y increase, CEO Khalid Al Gnoon told state news agency SPA.

MOBILY-

Etihad Etisalat (Mobily) booked SAR 638 mn in net income in 1Q 2024, up 37% y-o-y, it said in an earnings release (pdf). Meanwhile, the telecom company recorded its “highest quarterly revenues in the past decade,” at SAR 4.5 bn — a 11.7% y-o-y increase — reflecting strong performance across all revenue streams and a widening subscriber base.

Mobily’s capex remained largely unchanged in 1Q 2024, inching up 0.5% y-o-y to SAR 223 mn, while its freecash flow increased 6.7% y-o-y to SAR 1.4 bn. The company also reduced its net debt position by SAR 2.6 bn on an annual basis last quarter.

KUDOS- The telecom giant received the best customer award from CST for the third year running, along with other awards for video experience and download speed. The company was also branded the fastest growing telecom brand in the Middle East by Brand Finance.

ZAIN KSA-

Telecom operator Zain KSA’s net income dropped to SAR 67 mn in 1Q 2024, down from SAR 1.1 bn in the same quarter last year, according to a disclosure to Tadawul. The telecom company had initially reported SAR 480 mn in net income for 1Q 2023 (pdf), before adjusting the figure to SAR 1.1 bn to account for realizing the full gain from the sale of 3.6k towers to Golden Lattice Investment (Glic). Meanwhile, revenues inched up 4.7% y-o-y to SAR 2.5 bn last quarter on the back of growth in the B2B, 5G services, wholesale and Tamam segments.

ELM-

Digital security firm Elm — a unit of the PIF — reported a 7.1% y-o-y increase in net income to SAR 345 mn in 1Q 2024, according to a disclosure to Tadawul. Revenues rose 27.3% y-o-y to SAR 1.6 bn last quarter, fueled by booking more business from the digital business and business process outsourcing segments.

We’re yet to hear an update about Elm’s efforts to acquire the PIF’s stake in business service provider Thiqah. The related parties began talks in June to fully acquire the fund’s stake in Thiqah. PIF is a majority shareholder in both Elm and Thiqah.

SAUDI LOGISTICS SERVICES-

Saudi Logistics Services’ net income doubled y-o-y to SAR 208.5 mn in 1Q 2024, and revenues rose 33% to SAR 452.5 mn, according to the shareholders relations prospectus (pdf). The growth in top line was attributed to a 24% increase in booked business from the cargo handling segment — which accounted for 81% of overall revenues — along with an 89% hike in revenues from the logistics solutions segment which accounts for the remainder of overall revenues.

ALMUNAJEM-

Almunajem Foods’ net income grew 39.2% y-o-y to SAR 114 mn, according to a disclosure to Tadawul. Meanwhile, its top line remained essentially unchanged at SAR 903 mn last quarter.

Spark names Nasir Al-Naimi as its new chairman

King Salman Energy Park (Spark) has appointed Nasir Al Naimi (bio)as its new chairman, succeeding Mohammed Al Qahtani (Linkedin), according to a press release. Al Naimi has previously held leadership roles at Aramco, and the Arabian Drilling Company.

Biden administration at crossroads over defense pact with Saud

There’s no single story dominating coverage of Saudi in the foreign press this morning, but the Voice of America is out with a piece on what’s at stake for a defense pact between Saudi and the US. The Biden administration is mulling whether to proceed with an agreement that doesn’t include Saudi normalization with Israel, or hold its ground on the normalization, pundits say.

Background: Reuters and Bloomberg reported earlier this month that an agreement is in the works despite White House national security adviser Jake Sullivan saying that Washington agreeing to the bilateral pact is contingent on normalization.

Elsewhere: Local professionals aren’t thrilled with foreign consultants — or their price tags. That’s the takeaway from a piece in the Financial Times on the ubiquity of international consultancy firms in the Kingdom, which some have argued has become an unnecessary expense with little return.

In context: Saudi’s consultancy market grew to a record USD 3 bn in 2023, the salmon-colored paper writes, citing data by Source Global Research. That’s about the same size as the Swiss market for the same services.

Chinese contractor CMEC to build 20k residential units in projects in Saudi. Plus: technology, tourism and manufacturing

REAL ESTATE-

#1- The National Housing Company (NHC) inked an agreement with Chinese contractor China Machinery Engineering to build 20k residential units in NHC projects, it said on Linkedin yesterday. Neither the financial value, timeline, or project locations were disclosed.

Background: This comes just weeks after NHC sealed a SAR 1 bn contract with Spanish company Urbas to build 589 residential units for its Al Fursan project. The project, which is being developed by the Housing Ministry’s real estate investment arm, is one of the biggest suburbs regionally.

#2- Al Akaria finalizes contract for Diriyah car parking project: Binyah — a unit of Saudi Real Estate (Al Akaria) — signed a SAR 532.1 mn contract to carry out excavation work for two car parks for PIF-owned Diriyah Gate, it said in a disclosure to Tadawul yesterday. The freshly-inked contract will be valid for c. 14 months.

REMEMBER- Binyah is carrying out excavation work for a new metro line under a SAR 722 mn contract signed with Diriyah Gate last month.

DEBT WATCH-

#1- The Islamic Development Bank (IsDB) raised USD 2 bn from its first benchmark sukuk issuance this year, it said in a statement last week. It was priced at a final yield of 4.754% payable on a semi-annual basis. The sale for the five-year sukuk was oversubscribed, with “strong participation from real money accounts and official institutions as well as a number of first-time investors,” the Jeddah-based multilateral lender said. The final allocation saw 58% to investors from the region, followed by 17% for Asian investors and 16% to European investors and 9% for US offshore and others.

Use of proceeds: The IsDB said it will channel proceeds from the sale for the development of sustainable projects across its 57 member countries. The projects aim to boost food security, reduce poverty and provide sustainable infrastructure among others.

Advisors: IsDB hired out friends at HSBC as joint lead manager and joint bookrunners along with Citi, Crédit Agricole Corporate and Investment Bank, Standard Chartered, DBS Bank, ICBC, Natixis, SNB Capital, Dubai Islamic Bank, and Sharjah Islamic Bank.

#2- Al Rajhi Bank wrapped up the issuance of USD 1 bn additional tier 1 sustainable sukuk at a final yield of 6.375%, it said in a disclosure to Tadawul yesterday. The debt transaction saw heavy demand from local and foreign investors with some USD 3.5 bn in orders, according to Reuters. The sukuk have no fixed maturity rate and can first be redeemed after five years, according to the bank.

Advisors: Al Rajhi Bank hired our friends at HSBC, along with Al Rajhi Capital, Citigroup Global Markets, Dubai Islamic Bank, Emirates NBD Bank, Goldman Sachs International and Standard Chartered Bank as joint lead managers and bookrunners.

TECHNOLOGY-

#1- Local tech company DataVolt signed an investment agreement with the Uzbekistan government under a plan to develop up to 500 MW of green data centers across the Central Asian country, it said on Linkedin yesterday. The announcement comes a week after it broke ground on what it says is the world’s first data center to be operated on “green energy” at the IT Park Uzbekistan. The data center, valued at USD 150 mn, will have a total capacity of 10 MW.

#2- Al Moammar Information Systems (MIS) signed two contracts to provide system support services to the Justice Ministry and the Saudi Electricity Company (SEC), it said in two separate disclosures (here and here). MIS signed a SAR 81.2 mn contract with the Justice Ministry to support and upgrade IT systems used by the Justice Ministry. The second contract, valued at SAR 86.5 mn, sees the Tadawul-listed IT company providing network management and operation support services to SEC.

TOURISM-

Almosafer to turn Aseer into “top-tier global tourist destination”: Seera Group’s Almosafer entered a strategic partnership with Aseer Development Authority (Asda) to turn the southern mountainous Aseer province into a leading tourist hub, it said in a statement (pdf) yesterday. Under a new MoU, Asda will provide training and advisory services on the region to Almosafer front-line staff through the Almosafer Academy. The travel group will create package options to promote Aseer through its destination management subsidiary Discover Saudi.

Big plans for Aseer: Asda plans to turn Aseer into a world-class tourist destination while preserving the area’s natural environment, according to its website. It eyes luring in 9.3 mn tourists by 2030.

MANUFACTURING-

Cairo-listed Elsewedy Electric could earmark EGP 5 bn in capex in its 2024 budget as it looks to complete ongoing investments in its pipeline including in the Gulf, it said in a disclosure to the EGX (pdf) yesterday. This includes Elsewedy’s investments in the Kingdom, as the company looks to expand the production capacity of its factory here as part of its activities in the GCC, the statement read.

M&A WATCH-

Riyadh-based steel and wire maker United Wire Factories (Aslak) has extended an MoU for the potential acquisition of a stake in Al Raeda Industrial Investment foran additional period of 180 days, it said in a disclosure to Tadawul yesterday. Upon fruition, the agreement — which was initially signed in November of last year — will see Aslak acquire an unspecified stake in the Jeddah-based polymers manufacturing company in a bid to diversify its income.

Saudi and Egyptian assemblers take note: There’s opportunity in a looming global EV shakeout

Planet Finance feels more than a little China-obsessed this morning in the latest sign that post-covid economic policy is running headlong into the long-simmering “new Cold War” between Beijing and some western capitals.

Car assembly is among the first industries it could up-end as many governments — not all of them western — complain that Chinese manufacturers are dumping EVs on their markets at cut-rate prices. Here’s what you need to know this morning:

#1- Allegations that China unfairly subsidizes EVs continue to get plenty of attention, triggered by the USD 441 mn IPO this past Friday of EV maker Zeekr. The Geely unit saw its shares pop 34% in the biggest US debut for a Chinese company since 2021.

Zeekr went public as the Biden administration gets ready to slap tariffs of up to 100% on Chinese EVs, prompting the Financial Times to note that rising protectionism makes “the outlook for Chinese automakers in Europe and the US is highly uncertain.”

That will likely see Chinese car makers push to set up shop in abroad, CNBC says that Thailand, which bills itself as the “Detroit of the East,” could benefit. Byd and rival Neta Auto could start producing in Indonesia soon, as we noted last week.

Sound like a familiar playbook? It’s effectively what Japanese automakers did in the 1980s to smooth-over tensions with the US as imports threatened the American car industry.

Hey, Saudi and Egyptian assemblers — are you taking note?

#2- Speaking of huge subsidies: A “USD 81 bn subsidy surge” is fuelling the global battle for chipmaking supremacy between China and the West, Bloomberg writes in a deep dive this morning.

#3- Fast-fashion retailer Shein is looking at a possible London IPO after it was rebuffed by the United States, Reuters reports.

MARKETS THIS MORNING-

Major Asian benchmarks have started the trading week in the red. It’s anybody’s guess what’s driving sentiment this morning — the Monday blues? Earnings season ennui? — but CNBC suggests it’s because investors are “assessing China’s stronger-than-expected April inflation data.” Whatever the sheep’s entrails suggest…

US and European stock futures are largely unchanged this morning, and CNBC thinks there’s room for US equities in particular to extend last week’s gains. “Earnings estimates may have become too pessimistic leading into 1Q 2024 results, and widespread beat-and-raise throughout reporting season appears to have catalyzed a turnaround in sentiment,” it quotes one analyst as saying.

TASI	12,217	-0.6% (YTD: +2.1%)
MSCI Tadawul 30	1,530	-0.5% (YTD: -1.3%)
NomuC	27,195	0.4% (YTD: +10.9%)
USD : SAR (SAMA)	3.75 Sell	3.75 Buy
Interest rates	6% repo	5.5% reverse repo
EGX30	25,156	-3.3% (YTD: +1.1%)
ADX	9,090	-0.3% (YTD: -5.1%)
DFM	4,173	-0.2% (YTD: +2.8%)
S&P 500	5,223	+0.2% (YTD: +9.5%)
FTSE 100	8,434	+0.6% (YTD: +9.1%)
Euro Stoxx 50	5,085	+0.6% (YTD: +12.5%)
Brent crude	USD 82.79	-1.3%
Natural gas (Nymex)	USD 2.25	-2.1%
Gold	USD 2,375	+1.5%
BTC	USD 61,207	+0.3% (YTD: +44.8%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.6% yesterday on turnover of SAR 5.3 bn. The index is up 2.1% YTD.

In the green: Sadafco (+10%), Chemical (+10%) and AlJouf (+9.9%).

In the red: Thimar (-9.9%), Tanmiah (-9.9%) and Walaa (-9.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% yesterday on turnover of SAR 28.8 mn. The index is up 10.9% YTD.

In the green: NBM (+6.9%), Lana (+6.3%) and AlRashid Industrial (+5.2%).

In the red: Alhasoob (-9.1%), Pro Medex (-5.7%) and Raoom (-5.4%)

CALENDAR

MAY

13-15 May (Monday-Wednesday): Smart Future Expo, Riyadh.

13-15 May (Monday-Wednesday): Poultry Expo Riyadh.

14-15 May (Tuesday-Wednesday): Saudi Great Futures, Riyadh.

15-16 May (Wednesday-Thursday): Arab Forum of Anti-Corruption, Riyadh.

16-18 May (Thursday-Saturday): Red Sea Fashion Week, The St. Regis Red Sea Resort.

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

20-21 May (Monday-Tuesday): Future Projects Forum, Four Seasons Hotel, Riyadh.

20-22 May (Monday-Wednesday): Future Aviation Forum, Riyadh.

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

21-23 May (Tuesday-Thursday): WAGA 2024, Riyadh.

25 May (Saturday): Bidding deadline for Duba’s seawater reverse osmosis desalination plant in Tabuk.

27-28 May (Monday-Tuesday): Smart Data & AI Summit Saudi, JW Marriott Hotel, Riyadh.

Signposted to happen sometime in May:

Global Trade Review (GTR): KSA
Saudi Energy Convention

JUNE

2-3 June (Sunday-Monday): Global Project Management Forum, Riyadh.

4-7 June (Tuesday-Friday): Saudi Sports Show, Riyadh.

4-7 June (Tuesday-Friday): Aqarat Expo, Riyadh.

5 June (Wednesday): World Environment Day.

5 June (Wednesday): The Optimism Forum, Cairo, Egypt.

5 June (Wednesday): Digital Transformation Summit, Riyadh.

14-22 June (Friday-Saturday): Banks and capital markets closed for Eid Al Adha holiday.

AUGUST

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

SEPTEMBER

10-12 September (Tuesday-Thursday): Global AI Summit, Riyadh.

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

17-19 September (Tuesday-Thursday): EV Auto Show, Riyadh.

18-19 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam.

24-26 September (Tuesday-Thursday) Saudi Infrastructure Expo, Riyadh International Convention and Exhibition Center, Riyadh.

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

OCTOBER

21-22 October (Monday-Tuesday): Smart Ports & Logistics Transformation Summit, Riyadh.

NOVEMBER

2-9 November (Saturday- Saturday): WTA Finals, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

11-14 November (Monday-Thursday): Cityscape Global, Riyadh.

18-20 November (Monday-Wednesday): The Heavy Equipment and Truck Show, Dammam.

25-27 November (Monday-Wednesday): World Investment Conference, Riyadh.

26-28 November (Tuesday-Thursday): Saudi Electricity Expo, Riyadh.

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:

The AFC Champions League Elite

2025

FEBRUARY 2024

10-13 February (Monday-Thursday): Leap 2025, the Kingdom’s premier tech investment conference.

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