INTERVIEW: The investment logic of the Israel-UAE entente

INTERVIEW: The investment logic of the Israel-UAE entente
Illustration by Luis Grañena
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Updated 11 October 2020

INTERVIEW: The investment logic of the Israel-UAE entente

INTERVIEW: The investment logic of the Israel-UAE entente
  • Sabah Al-Binali on how a Dubai family business hooked up with OurCrowd, a $1.5 billion-dollar Israeli firm

Sabah Al-Binali has a reputation in the Arab world as a straight-talking deal-doer, with a long record of high-profile transactions in the UAE and Saudi Arabia on his CV. But his latest venture could be just about the most significant of the lot.

Al-Binali, a native of Abu Dhabi but with a solid family lineage in Saudi Arabia, was named head of Gulf region business for OurCrowd, a $1.5 billion Israeli venture capital firm, which has linked up with Al Naboodah, one of the best-known family business names in the region.

“If you look at my experience and what I’ve done in life, it’s been about building businesses and making investments — creating value. It’s not just been about harvesting money,” he told Arab News.

The OurCrowd-Al Naboodah link-up could not have been possible just a few short weeks ago. It is one of the first fruits of the normalization of relations between the UAE and Israel under the Abraham Accord, and the biggest so far in the financial sector.

An investment fund has been set up under the deal, initially with $100 million of capital injected by Al Naboodah and some other Gulf entrepreneurs. Al Naboodah’s business development unit, Phoenix Capital, will seek to create a two-way street in investment business between Israel and the UAE, and with OurCrowd’s 220 portfolio companies around the world.

“I think it says something that one of the first firms Al Naboodah looked to was OurCrowd. It’s a testament that the language of business is global. Both countries have been dealing with the world before — it’s not as if this is the first time that a market has opened from the UAE to the rest of the world.

“The entrepreneurial and business mentality is strong in both counties and once the political normalization happened, you saw how fast things can happen, because both sides are very experienced at striking cross-border deals,” Al-Binali said. 

He believes there are many opportunities for mutually profitable investment relations between the Gulf and Israel. “On all facets of investment, on business development, on research and development, on innovation and on trade, these opportunities exist both in Israel and the UAE. Both countries can be both the origin and destination of the investment,” he added. The eventual size of the fund could reach “multiples” of the initial $100 million, he said.

There are some fundamental synergies between the UAE and Israel that make the connection compelling. “The UAE and GCC governments have created great infrastructure for foreign firms to expand into the region. The Israeli government created a ‘startup nation’ with a leading edge in global technology. It is a natural match,” he added.

He is only a few days into the job, which was agreed within a month of the Israeli-UAE entente, and understandably there is much detailed work to do on where investment funds are directed. But already there are three main channels of focus.

One is into OurCrowd’s big international portfolio. “OurCrowd is a global platform — 40 percent of its investments are outside of Israel, in the US, Australia and Singapore. One of the largest recent unicorns was in Singapore,” he said.


BIO

Born: Abu Dhabi 1970

Education

  • Graduate Princeton University, New Jersey
  • Doctorate Columbia University, New York

Career

  • Head of treasury, Union National Bank
  • Managing director, Saudi Swiss Securities
  • Chairman, Zawya
  • Board director, Credit Suisse Saudi Arabia
  • CEO, Saffar Capital
  • Board director, Al Awael International Securities
  • Vice chairman, Gulf Finance
  • Chief investment officer, Shuaa Capital
  • Vice chairman, The National Investor
  • Chairman and CEO, Universal Strategy
  • Head of Gulf region, OurCrowd.

Then there is business expansion by OurCrowd’s current and future portfolio companies. “These are companies that want to expand operationally into the UAE, Bahrain and other countries if and when they normalize.

“It makes a lot of sense — there is no corporate income tax here in the UAE, while there is lots of tax in Israel. Our work and residence laws are very welcoming and open. We’re a hospitable nation that has experienced welcoming people from all over the world for decades. So that’s an easy one,” Al-Binali said.

“The third one is to back startups and entrepreneurs in the UAE, Bahrain and other places where things are normalized. You can see we’re looking at all opportunities and I’m sure there will be many of them,” he added.

Al-Binali reeled off the potential sectors for the new fund. He sees technology as an enabler in all sorts of areas: Medical, agriculture, national security including cyber, and financial technology. “Fintech in particular, because Israel has technology and the UAE is a financial hub,” he explained.

As an example of business “going the other way,” he cited DP World’s recent deal with Bank Leumi to develop port logistics in the country, but there are many other potential areas too.

In hospitality and tourism, he sees a big potential market in Western Christian travelers who want to undertake a Middle East tour through Jerusalem and Dubai, for example.

The defense business is complicated by the international laws and treaties covering the trade in arms, but, as Al-Binali pointed out, it is not just about weapons of war.

“Cyber technology doesn’t have to be part of the defense sector. It can be used by the financial sector or the telecoms companies. We’re not necessarily talking about the sale of weapons or arms, we’re talking about technology”, he said.

Drone technology is another example of multiple applications. “It can be used in terms of national security, but it can also be used for the maintenance of pipelines and geological surveying. There are lots of uses of drones that go beyond the military.

“Small drones can give civil defense an instant view of what’s going on in a large fire in a building. These technologies can be used in the military but can also be adapted to the civilian sector,” he said.

OurCrowd was founded by American-Israeli entrepreneur Jonathan Medved seven years ago, with a distinct technology edge. It lists Virgin Hyperloop One, the fast-transit technology being developed in the US, but it also has big plans in the Middle East, with one of its portfolio companies boasting an interest valued at $3.8 million.

Al Nabodah is one of the oldest family businesses in the UAE, with the traditional range of business interests in construction, real estate, logistics and transport. “In the investment world and the business world, Al Naboodah is very well known. Anybody wanting to know who to do business with in Dubai or the UAE would have put Al Naboodah on their list. They have deep contacts across the world,” Al-Binali said.

How does Israeli business culture compare and contrast with that of the UAE? 

“It’s similar in that it’s built on relationships and trust, and person-to-person contact — backed by legal paperwork of course — but you have that same initial contact culture. I call it Middle East-ism. In terms of communications style, I’d compare Israelis with Russians, who I’ve experienced before. The language is much more direct.

“But the Israelis understand us because they’ve dealt with a lot of other countries that have the same culture, and I understand the Israelis’ communications style. It’s similar to Russians, and quite similar to New Yorkers,” he said.

Al Naboodah also has an office in Riyadh and has done a lot of business in Saudi Arabia, and while Al-Binali believes it is too early to talk about a rapprochement between the Kingdom and Israel, he is sure there is plenty of business opportunity there too.

“We cannot talk in concrete terms until Saudi Arabia decides whether or if it wants to normalize. But I can say we’d see the same speed of business building that we’ve seen here, because the Saudis have the same characteristics.

“Saudi government institutions are worldly, they’re used to dealing with companies from around the world. Saudi business families are also very global. The same elements that make me see the first initial steps to success in the UAE-Israel partnership exist in Saudi too — except that the Kingdom has a much larger economy.

“If and when relations are normalized, from a business perspective, I can see tremendous value creation in Saudi and Israel, but also for the UAE and Bahrain. The more the GCC is seen as a big common market, the more interest there will be,” he said.

“Some of my business friends in New York are telling me they will deploy into anything between Israel and the UAE. They see this as a virgin business route that can pay huge dividends,” he added.


Saudi Arabia’s biggest gym chain swings to loss

Saudi Arabia’s biggest gym chain swings to loss
Updated 20 April 2021

Saudi Arabia’s biggest gym chain swings to loss

Saudi Arabia’s biggest gym chain swings to loss
  • Operates 135 gyms in UAE and KSA
  • Pandemic has hit fitness sector hard

DUBAI: Saudi Arabia’s biggest gym chain swung to a first quarter loss as the pandemic forced the closure of thousands of fitness clubs worldwide.
Leejam Sports Company reported a net loss of more than SR6.9 million in the first quarter compared to a profit of SR6.2 million a year earlier, it said in filing to the Tadawul stock exchange where its shares are listed.
Overall revenues dipped by about a quarter over the period to SR148.5 million, it said.
Total gym memberships, personal training revenues and rental income fell by more than SR49 million as a result of gym closures in the Kingdom from Feb.5, 2021 to March 6, 2021, it said.
Meanwhile the need to apply precautionary measures in response to the pandemic reduced the number of members joining the clubs.
Leejam operates some 135 Fitness Time centers in Saudi Arabia and the UAE.


‘Many more airlines will go under’ Qatar Airways boss tells CNN

‘Many more airlines will go under’ Qatar Airways boss tells CNN
Updated 20 April 2021

‘Many more airlines will go under’ Qatar Airways boss tells CNN

‘Many more airlines will go under’ Qatar Airways boss tells CNN
  • Qatar Airways CEO Akbar Al-Baker gave a bleak assessment of the challenges facing the industry as it struggles to recover the collapse in global air travel

DUBAI: Qatar Airways CEO Akbar Al-Baker has warned that many more airlines will be forced out of business by the pandemic.
In an exclusive interview on CNN’s Quest Means Business, Qatar Airways CEO Akbar Al-Baker gave a bleak assessment of the challenges facing the industry as it struggles to recover the collapse in global air travel.
“By the time this pandemic is over, there will only be few airlines that are strong and will continue operating,” he said. “A lot of other airlines will go under. And this will continue to happen, because we have not seen the worst of it over yet.”
He said that returning the airline industry to full strength should be a key priority to boost the global economic outlook.


“If this pandemic prolongs for too long, this will completely destroy the world’s economy which is so dependent on airlines for delivering business, carrying freight around, and most importantly creating jobs,” he said.
The outspoken airline chief highlighted some of the safety measures adopted by the airline and its hub at Hamad International Airport in Doha.
These include high-tech temperature sensors, ultraviolet disinfectant processes, and mask-wearing on flights.
He also spoke about the process of asking the company’s shareholders – the Qatari government – for a cash injection during the pandemic, “I couldn’t just jump the queue and go and tell my boss, the ruler of my country, that our situation is so dire, and this is what we need. Because I am sure there were a lot of other people in the queue before me telling him the same thing.”

The CEO also spoke about access to vaccinations and mitigating the risks amid the slow roll out of vaccines in some countries. He told Quest, “It will be a problem for the aviation industry. And we will have to work a way within this risks that we will have to take. But we will have to do things, we'll have to put processes, we'll have to put systems in place to mitigate that risk.” A resurgence of the coronavirus in many countries in recent weeks is threatening to quash some positive signs that had been slowly emerging from the sector. At the same time many passengers are reluctant to fly even where permitted, because of safety concerns and confusion over the different vaccination, testing and quarantine requirements of different countries. Industry body IATA has been trying to address that challenge with its trial Travel Pass initiative aimed at informing passengers about what tests, vaccines and other measures they require at their destinations.

Eni helps UAE emirate of Ras Al-Khaimah look for natural gas

Eni helps UAE emirate of Ras Al-Khaimah look for natural gas
Updated 20 April 2021

Eni helps UAE emirate of Ras Al-Khaimah look for natural gas

Eni helps UAE emirate of Ras Al-Khaimah look for natural gas
  • Eni is already present in Ras Al-Khaimah operating Offshore Block A

DUBAI: Italian energy giant Eni is helping the UAE's northernmost emirate explore for gas.

Its Eni RAK unit has struck an exploration and production agreement with Ras Al-Khaimah Petroleum Authority, the Italian company said in a statement.
The agreement relates to "Block 7" which covers an area of 430 square kilometers. Eni RAK will act as operator of the block with a 90 percent participating interest and Ras Al Khaimah’s national oil company RAK Gas as a partner, with a 10 percent stake.
"Block 7 represents an under-explored acreage in a complex thrust belt geological setting, similar to that of the recent discovery of Mahani in the adjacent Sharjah Emirate," Eni said in a statement.
"The newly acquired 3D seismic will allow the joint venture to assess the geological setting of the area and eventually unlock its hydrocarbon potential. The presence of the existing gas processing facilities in the emirate would also allow a rapid development of any discoveries."
Eni has been involved in a number of gas finds in the Middle East in recent years, most notably in Egypt and the Eastern Mediterranean where the discoveries have ushered in dramatic economic transformations.
Eni is already present  in Ras Al-Khaimah operating Offshore Block A where, after an initial geological and geophysical study period, preparations for drilling operations have started, it said.
The company holds the largest exploration acreage among the international oil companies present in the UAE covering more than 26,000  square kilometers.


UAE extends key parts of $13.6bn economic support plan until mid-2022

UAE extends key parts of $13.6bn economic support plan until mid-2022
Updated 20 April 2021

UAE extends key parts of $13.6bn economic support plan until mid-2022

UAE extends key parts of $13.6bn economic support plan until mid-2022
  • Move will help banks offer new loans
  • Part of wider response to pandemic

The UAE Central Bank has extended key parts of its 50 billion dirams ($13.6 billion) economic support plan until mid-2022.
Under this extension, financial institutions will still be able to benefit from a zero-cost liquidity facility covered by a guarantee of 50 billion dirhams until June 30, 2022, it said in a statement on Tuesday.
The extension decision enables banks to provide new loans and financing to individual clients, small and medium enterprises (SMEs), and other private sector companies affected by the repercussions of the coronavirus pandemic.
“The extension of the targeted economic support plan will provide continuous support from the financial system for the sectors adversely affected by the pandemic,” said Governor Khalid Al-Tameemi.
“This comes as part of support for the recovery phase, in line with the Emirates Central Bank’s mandate to ensure Financial and monetary stability in the Emirates,” he explained.
The Targeted Economic Support Plan is a comprehensive program that covers all measures taken by the Central Bank of the United Arab Emirates in response to the coronavirus pandemic.


Saudi Arabia reduces US bonds holdings by 27.9% in 2021

Saudi Arabia reduces US bonds holdings by 27.9% in 2021
Updated 20 April 2021

Saudi Arabia reduces US bonds holdings by 27.9% in 2021

Saudi Arabia reduces US bonds holdings by 27.9% in 2021
  • Saudi Arabia’s investments in US Treasury bonds included $105.98 billion in “long-term bonds”

RIYADH: Saudi Arabia reduced its holdings of US Treasury bonds to $132.9 billion by the end of February, down by $2.2 billion on a monthly basis, Okaz newspaper reported.
Saudi Arabia has reduced its holdings by 27.93 percent during the last 12 months to $132.9 billion by the end of February of this year.
The Kingdom maintained its 14th position among the largest holders of US bonds in February 2021.
Saudi Arabia’s investments in US Treasury bonds included $105.98 billion in “long-term bonds,” representing 80 percent of the total, and $26.92 billion in “short-term bonds,” accounting for 20 percent of the total.