Saudi Arabia’s military company eyes $10 billion revenue in next five years

Saudi Arabian Military Industries (SAMI) logo is seen during the International Defence Exhibition & Conference (IDEX) in Abu Dhabi, United Arab Emirates February 17, 2019. (Reuters)
Updated 18 March 2019
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Saudi Arabia’s military company eyes $10 billion revenue in next five years

  • SAMI wants exports to account for 30 percent of its revenue by 2030
  • The company, established in May 2017, seeks to localize 50 percent of military spending by 2030

ABU DHABI: State-owned Saudi Arabian Military Industries (SAMI) aims to generate $10 billion in revenue over the next five years, its chief executive said on Monday, as the wealth fund-backed group spearheads a drive to localize military spending.
SAMI, owned by the Public Investment Fund, wants exports to account for 30 percent of its revenue by 2030, Chief Executive Andreas Schwer told Reuters at a defense event in Abu Dhabi.
The company, established in May 2017, seeks to localize 50 percent of military spending by 2030 as part of Crown Prince Mohammed bin Salman’s plan to diversify the kingdom’s economy away from oil revenue.
“By 2030 SAMI will be more than just a regional player. We will be a truly global player, to be among the top 10 companies,” Schwer said. “We won’t serve only the domestic market. We will generate 30 percent of revenues from export markets by 2030.”
He said Saudi Arabia has a $70 billion annual defense budget plus a $30 billion security-related budget from other ministries.
Schwer said SAMI had signed 19 joint venture deals with companies from Western Europe, the United States, Asia and South Africa since 2018 and planned to sign 25 to 30 more in the next five years.
Schwer said SAMI would not do business with Russia due to US sanctions. “SAMI as an entity will not do any business with any country or company which is falling under embargo or sanctions,” he said.
SAMI also planned to build a company in the Kingdom as part of a joint venture with Abu Dhabi state investor Mubadala to build aircraft components for commercial and military uses. A foreign partner could join the venture.
“We are looking to acquire other existing assets as a technology provider,” Schwer said.


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 24 March 2019
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Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.