Saudi Crown Prince reveals Neom megacity to be listed

Visitors watch a 3D presentation during an exhibition on "Neom", a new business and industrial city, in Riyadh, Saudi Arabia. (REUTERS
Updated 26 October 2017
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Saudi Crown Prince reveals Neom megacity to be listed

RIYADH: The $500 billion mega-city planned by Saudi Arabia will be floated on financial markets alongside oil giant Saudi Aramco as part of the kingdom’s drive to diversify away from oil, Crown Prince Mohammed bin Salman said in an interview.
The 26,500-square kilometers business and industrial zone, named Neom, will extend into Jordan and Egypt. It was unveiled on Tuesday at a three-day international investment conference.
The surprise announcement is the latest — and most extraordinary — in a slate of privatization programs led by the floating of oil giant Saudi Aramco. The sales are designed to boost the Saudi economy and create jobs for millions of young people.
“Without a doubt, at the end of the day Neom will be floated in the markets. The first zone floated in the public markets. It’s as if you float the city of New York,” the Crown Prince said.
Prince Mohammed also said the Saudi Aramco IPO was on track for next year, dismissing reports of delays, adding it could be valued at more than $2 trillion.
He spoke on the sidelines of the Future Investment Initiative conference, which has attracted nearly 4,000 delegates from around the world to Riyadh this week.
Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia.
Neom will be fully owned by Saudi Arabia’s sovereign Public Investment Fund (PIF) until its listing, and will attract investments from companies in renewable energy, biotechnology, advanced manufacturing and entertainment, the PIF has said.
“It won’t be listed in the markets until the idea is mature enough,” he said. “It might be after 2030, it might be before, but the idea and the strategy is to float it eventually.”
He said the name mixed “neo,” meaning new, with M, the first letter of the Arabic word for future.
It is part of the Vision 2030 plan to overhaul the economy of Saudi Arabia, OPEC’s largest producer, and provide jobs for an overwhelmingly young population amid a global oil price decline since 2014.
Economic growth has slowed and the economy may shrink this year as the government introduces austerity measures.
“The idea is not to restructure the economy as much as to seize the opportunities available that we didn’t address before. We have high capacity and we use only a little.”
The Crown Prince said Saudi Arabia’s dispute with neighboring Qatar had not affected investment.
“Qatar is a very, very, very small issue,” he said.
Saudi Arabia and three Arab allies cut diplomatic and transport ties with Qatar earlier this year over accusations Doha supported Islamic “terrorists.” Qatar denies the allegations.
He said the kingdom’s war in Yemen would continue in order to prevent the Houthi armed movement from turning into another “Hezbollah” on Saudi’s southern border.
“We’re pursuing until we can be sure that nothing will happen there like Hezbollah again, because Yemen is more dangerous than Lebanon,” he said.


Uber narrows loss but is a long way from finding profit, targets India and Middle East

Updated 16 August 2018
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Uber narrows loss but is a long way from finding profit, targets India and Middle East

  • Uber’s net loss narrowed to $891 million in its second quarter ending June 30 from $1.1 billion a year earlier
  • While Uber has retreated from China, Southeast Asia and Russia, it says it is sticking with India and the Middle East

SAN FRANCISCO: Uber said on Wednesday it narrowed its quarterly losses from a year earlier, although the ride-hailing company is still a long way from proving it can be profitable as it gears up to go public in 2019.
Under the leadership of Dara Khosrowshahi, who became chief executive in September, Uber has juggled investing in new markets while retreating from others where it was losing millions of dollars. It is building up services like food delivery and freight hauling as it seeks new revenue, and possibly a path to profitability, outside its core business.
Uber’s net loss narrowed to $891 million in its second quarter ending June 30 from $1.1 billion a year earlier. Its adjusted loss before interest, taxes, depreciation and amortization was $614 million, down from $773 million a year earlier.
Net revenue rose more quickly than gross bookings in the second quarter from the prior period as the company dialed back on promotional subsidies of rides.
But its growth faces risks from decisions like that by New York City this month to cap licenses for ride-hailing services for one year. Uber has also had to grapple with corporate scandals and has lingering and costly legal battles, including over its classification of drivers as independent contractors, and federal probes to resolve.
“I remain unimpressed,” said Brent Goldfarb, associate professor of management and entrepreneurship at the University of Maryland. Improving losses by cutting “the lowest hanging fruit doesn’t mean the underlying model is profitable.”
The company’s most recent valuation was pegged earlier this year at $72 billion. But that was based on Uber becoming the global winner in ride-hailing and logistics, a vision it has retrenched from, and public investors may see a smaller company worth less.
Uber can expect a valuation haircut in an IPO if it does not show more progress toward becoming profitable, said David Brophy, professor of finance at the University of Michigan.
Adjusted losses in the first quarter were $312 million, excluding gains from Uber selling some overseas businesses to local competitors. The sale of its Russia and Southeast Asia operations resulted in a one-time $2.5 billion gain in the first quarter and lowered second-quarter costs.
Under pressure from its board, Uber has endeavored to find more savings after years of a growth-at-all-cost mentality under prior CEO Travis Kalanick, enabled by billions of dollars in private investment.
The company had $12 billion in quarterly gross bookings, which includes rides and Uber Eats, up 6 percent from the previous quarter and about 40 percent from a year before.
Net revenue, which strips out what gets paid to drivers as well as promotions and refunds, was $2.8 billion, up 8 percent over the first quarter and more than 60 percent from last year.
“We had another great quarter, continuing to grow at an impressive rate for a business of our scale,” Khosrowshahi said in a statement.

STICKING WITH INDIA, MIDDLE EAST
Uber is a private company and not required to publicly disclose financials, but recently boosted transparency by starting to release selected figures as it eyes an initial public offering.
Faced with criticism about flooding cities with cars, Uber is spending on bike and scooter rentals, including its acquisition of JUMP electric bikes in April.
While Uber has retreated from China, Southeast Asia and Russia, it says it is sticking with India and the Middle East, tough markets with strong local competitors.
“We are cementing our leadership position in India and the Middle East,” Khosrowshahi said.
Several Uber investors have told Reuters they want Uber to leave these costly markets too and focus on North America, where US-based Lyft continues to pose a threat, and pull back on ancillary businesses like Uber Freight.
Uber has $7.3 billion in cash on hand, up a billion dollars from the end of the first quarter. The company listed an inflow of $1.5 billion from term loan issuance, net of costs.
(Reporting by Heather Somerville; Editing by Meredith Mazzilli)