Saudi tech firm Sure Global shares shed on market debut

Update Saudi tech firm Sure Global shares shed on market debut
The Riyadh-based company’s initial public offering price had earlier been set at SR70 ($19), thanks to high investor interest. (Supplied)
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Updated 24 October 2022

Saudi tech firm Sure Global shares shed on market debut

Saudi tech firm Sure Global shares shed on market debut

RIYADH: Sure Global Technology Co.'s shares declined 1.43 percent below the listing price on their debut on Tadawul’s Nomu-Parallel Market on Oct. 24.

The Riyadh-based company’s initial public offering price had earlier been set at SR70 ($19), thanks to high investor interest.

Established in 2006, Sure International Technology offers a wide range of services, including wholesale and retail sales of computers and accessories, printers and inks, systems analysis, software design and programming, and senior management consulting.


Indian tycoon Adani’s market losses top $100 billion as crisis shockwaves spread

Indian tycoon Adani’s market losses top $100 billion as crisis shockwaves spread
Updated 9 sec ago

Indian tycoon Adani’s market losses top $100 billion as crisis shockwaves spread

Indian tycoon Adani’s market losses top $100 billion as crisis shockwaves spread
  • Mukesh Ambani of Reliance Industries is now Asia’s richest person as Adani's net worth plunges
  • S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices

NEW DELHI/MUMBAI: Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5 billion stock offering.
Another challenge for Adani on Thursday came when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective Feb. 7, which would make the shares less appealing to sustainability-minded funds.
In addition, India’s National Stock Exchange said it has placed on additional surveillance shares of Adani Enterprises , Adani Ports and Ambuja Cements .
However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in the financial health of his conglomerate, Bloomberg News reported on Thursday.
The shock withdrawal of Adani Enterprises’ share sale marks a dramatic setback for founder Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by US-based short-seller Hindenburg Research.
Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition lawmakers called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group. Meanwhile, Citigroup’s wealth unit stopped making margin loans to clients against Adani Group securities.

The crisis marks an dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies and attracted investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion stretching from ports to the power sector.
In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.
“Adani may have started a confidence crisis in Indian shares and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
Adani Enterprises shares tumbled 27 percent on Thursday, closing at their lowest level since March 2022.
Other group companies also lost further ground, with 10 percent losses at Adani Total Gas, Adani Green Energy and Adani Transmission, while Adani Ports and Special Economic Zone shed nearly 7 percent.
Since Hindenburg’s report on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises — described as an incubator of Adani’s businesses — has lost $26 billion in market capitalization.
Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.
The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.
His rival Mukesh Ambani of Reliance Industries is now Asia’s richest person.

Mukesh Ambani, chairman oil-to-telecom conglomerate Reliance Industries, is now Asia''s richest person. (AFP) file)


Broader concerns
Adani’s plummeting stock and bond prices have raised concerns about the likelihood of a wider impact on India’s financial system.
India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.
CLSA estimates that Indian banks were exposed to about 40 percent of the $24.5 billion of Adani Group debt in the fiscal year to March 2022.
Dollar bonds issued by entities of Adani Group extended losses on Thursday, with notes of Adani Green Energy crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding US dollar-denominated bonds on Thursday, Reuters reported citing sources.
“We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” said Monica Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.
In New Delhi, opposition lawmakers submitted notices in parliament demanding discussion of the short-seller’s report.
The Congress Party called for a Joint Parliamentary Committee be set up or a Supreme Court monitored investigation, while some lawmakers shouted anti-Adani slogans inside parliament, which was adjourned for the day.
Adani vs Hindenburg
Adani made acquisitions worth $13.8 billion in 2022, Dealogic data showed, its highest ever and more than double the previous year.
The canceled fundraising was critical for Adani, which had said it would use $1.33 billion to fund green hydrogen projects, airports facilities and greenfield expressways, and $508 million to repay debt at some units.
Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.
Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.
Late on Wednesday, the group’s founder said he was withdrawing the sale given the share price fall, adding his board felt going ahead with it “will not be morally correct.”


Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
Updated 02 February 2023

Oil steady as Russian crude products ban looms

Oil steady as Russian crude products ban looms
  • A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply

LONDON: Oil prices were steady on Thursday as looming sanctions on Russian oil products added uncertainty over supply but the dollar lost value in a boost to the oil trade.

Brent crude futures fell 18 cents, or 0.2 percent, to $82.66 a barrel by 1415 GMT while West Texas Intermediate US crude futures lost 3 cents to $76.38.

Both benchmarks plunged more than 3 percent overnight after US government data showed a large build in oil stocks. A EU ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply.

EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products after postponing a decision on Wednesday because of divisions among member states, diplomats said. The European Commission proposed last week that from Feb. 5 the EU apply a price cap of $100 a barrel on premium Russian oil products such as diesel and a $45 per barrel cap on discounted products such as fuel oil.

Meanwhile an OPEC+ panel endorsed the producer group’s current output policy at a meeting on Wednesday, leaving production cuts agreed last year unchanged amid hopes of higher Chinese demand and uncertain prospects for Russian supply.

OPEC+ agreed to cut its production target by 2 million barrels per day — about 2 percent of global demand — from November last year until the end of 2023 to support the market.


Saudi Arabia and France sign cooperation MoU in the field of energy

Saudi Arabia and France sign cooperation MoU in the field of energy
Updated 02 February 2023

Saudi Arabia and France sign cooperation MoU in the field of energy

Saudi Arabia and France sign cooperation MoU in the field of energy
  • Agreement calls for increased focus on technologies which mitigate effects of climate change

RIYADH: Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman signed a memorandum of understanding on Thursday with Catherine Colonna, French minister of Europe and foreign affairs, to establish a framework for cooperation in the energy sector, the Saudi Press Agency reported.

The memorandum, which was signed in Riyadh, outlined cooperation between the countries in the fields of electricity, renewables, energy efficiency, storage, smart grids, oil and gas and their derivatives, refining, petrochemicals, and the distribution and marketing sector.

The agreement also calls for increased cooperation in technologies which mitigate the effects of climate change, such as carbon capture and hydrogen production.

The deal addresses areas of collaboration in digital transformation, localization of materials, products, and services related to the energy sectors, joint research, skill training, and cooperation between specialized companies.

Prince Abdulaziz and Colonna also discussed future opportunities in various fields of energy, as well as the prospects for cooperation in the peaceful uses of atomic energy.

 


Green-certified utility projects on the rise in Saudi Arabia

 Green-certified utility projects on the rise in Saudi Arabia
Updated 02 February 2023

Green-certified utility projects on the rise in Saudi Arabia

 Green-certified utility projects on the rise in Saudi Arabia
  • Saudi Arabia’s National Water Strategy is reshaping the private sector with a focus on ESG principles

RIYADH: When a consortium of water infrastructure companies closed green loans worth $480 million for three independent sewage treatment plants in Saudi Arabia last March, it was a harbinger of the verdant opportunity that awaited the Kingdom’s sustainable projects.

It was a watershed moment for the consortium of Saudi companies Tawzea, Tamasuk, and Spanish firm Acciona when they secured the amount for three ISTPs — Madinah 3, Buraidah 2, and Tabuk 2 — in just six months of expressing their interest.

What made the project a prime beneficiary of green financing was its commitment to the sustainability goals envisaged by the Saudi Vision 2030 and the endeavors of Saudi Water Partnership Co., the state-run company which facilitates the commercialization of water and electricity in the Kingdom.

Saudi Arabia is making headlines by taking measures to ensure a smooth transition to green energy and fight climate change. The Kingdom will host the 44th International Association for Energy Economics International Conference from Feb. 4-9 to discuss the path for a sustainable future.

“The construction and operation of the ISTPs will aid in optimizing the use of water resources in Saudi Arabia by providing treated and renewable water to be used for agricultural purposes, therefore reducing the consumption of freshwater,” said María Ortiz de Mendivil, primary analyst, S&P Global Ratings, in a second-party opinion note certifying the projects as green.

Once completed, Madinah 3 will serve up to 1.5 million inhabitants of existing and future residential areas near the city of Madinah. It will have an initial treatment capacity of 200,000 m³ per day, which can be expanded to 375,000 m³ per day.

Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m³ per day. Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m³ per day.

The treated water will replace freshwater resources for farming, saving this scarce resource and contributing directly to the nation’s water security. Daily water savings are expected to amount to 190,000 m³ per day at Madinah 3, 142,500 at Buraidah 2, and 85,500 at Tabuk 2.

HIGHLIGHTS

Madinah 3 will have an initial treatment capacity of 200,000 m³ per day, which can be expanded to 375,000 m³ per day.

Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m³ per day.

Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m³ per day.

“We have a zero-sludge-dispatch policy, meaning that all the sludge that we produce in these wastewater treatment plants is either used by farmers to replace other fertilizers or sent to cement factories for the production of cement,” said Julio De La Rosa, the Middle East business development director of Acciona Agua, while speaking at an International Desalination Association’s forum held two months ago.

Additionally, the photovoltaic solar panels installed at each plant will generate renewable power that will partially cover their daily energy consumption.

The green-certified project drew the attention of the bigwigs of the finance world, such as Abu Dhabi Islamic Bank, Mitsubishi UFJ Financial Group, Alimna Bank, Riyad Bank, and Siemens Bank, which parked their investments at first blush.

Green loans for a greener planet

So, what exactly is a green loan? According to the World Bank, a green loan is a form of financing that enables borrowers to use the proceeds to exclusively fund projects that make a substantial contribution to an environmental objective.

It is similar to a bond. The only difference is that a loan is typically smaller than a bond and executed in private operations. Also, green loans and green bonds follow different but consistent principles: The Green Loan Principles and the Green Bond Principles of the International Capital Market Association.

This green financing assumes significance as investors worldwide are earmarking their funds into sustainable investment projects that neutralize greenhouse gases and run on renewable energy, making them attractive propositions in an environmentally conscious world.

Saudi Arabia, particularly, has been facing severe challenges due to the unsustainable use of water resources, and it has limited reserves of nonrenewable groundwater, which are depleting rapidly. In addition, high water demand in the agriculture sector has also exacerbated the water scarcity situation.

According to figures published by the Minister of Environment, Water and Agriculture, between 1985 and 2020, the water level in the Kingdom almost dropped by 90 meters. That led to the National Water Strategy, inspired by the Vision 2030 blueprint, which identified levers and enablers to fix the problem.

“The National Water Strategy reshaped the private sector, which has started to think about how to be efficient and contribute to the water strategy, gain benefits as per their sustainability roadmap and accommodate the environment, social and governance in their strategies,” said Mohammed Al Halawani, CEO of Tawzea.

This public-private partnership has spawned many efficient independent water and power projects and desalination plants that are fast becoming textbook case studies for sustainable projects worldwide.

An excellent case study of the PPP is the Taif Independent Sewage Treatment Plant, which was developed by Cobra & Tawzea and had a treatment capacity of 1,00,000 m³ per day.

It is the first ISTP that reached commercial operation in Saudi Arabia from the private sector under the build-operate-transfer model.

The plant has less than 0.35 kilowatt-hour per m³ electricity consumption. About 30 percent of the electricity was recovered by biogas cogeneration. Even the residual output was 90 percent dry solids and beneficial class-A sludge.

“Over 210,000 sq. m of trees will be introduced as part of the project with the support of the Saudi Green Initiative, which is equivalent to approximately sequestering 136 tons of carbon dioxide per year,” said Al Halawani.

Sustainable to the core

Another example is the Shuaibah 3 Water Desalination Co., a special-purpose vehicle created to finance and develop the Shuaibah 3 Independent Water Project.

The company was launched by Saudi utility developer ACWA Power and Water & Electricity Holding Co., also known as Badeel, both owned in part or whole by the Public Investment Fund.

The project aims to replace a thermal desalination plant, the Shuaibah 3 IWPP, powered by fossil fuels. The use of reverse osmosis technology makes the proposed plant more energy efficient than the previous thermal desalination plant that will come offline.

The conventional thermal desalination process, multi-stage flash distillation, and multiple-effect distillation produced nearly 20 kg of carbon dioxide equivalent per m³. However, the carbon footprint for the RO process could be anywhere from 0.4 to 6.7 kg of carbon dioxide equivalent per m³.

According to ACWA Power, this technology shift could accrue savings of about 45 million tons of carbon dioxide yearly.

That’s not all. Green financing is greenlighting a host of projects worldwide, and for the first time, more money was raised in the debt markets in 2022 for climate-friendly projects than fossil-fuel companies.

According to a Bloomberg report, roughly $580 billion was arranged in 2022 for renewable energy and other environmentally responsible ventures, while the oil, gas, and coal industries turned to lenders and underwriters for closer to $530 billion. 

While it may not indicate that green financing is finally having an upper hand on oil lenders, the well-trodden bazaars of fossil fuel funding have become eerily cold after the global pushback on loss and damage during the UN Climate Change Conference in Egypt last year.

Saudi Arabia, on its part, lives by the age-old adage: You never miss the water till the well runs dry. While going to press, Saudi power juggernaut ACWA Power announced that it added 2.4 million m³ day of water desalination capacity across four reverse osmosis megaprojects in 2022, the largest in a calendar year in the company’s history.

This achievement brings the company’s total water capacity under management to 6.4 million m³ across 16 projects in four countries, producing water at less than $0.50 per m³, which is up to three-quarters lower than the tariff of $2 per m³ just a few years ago.

Ergo, the message is loud and clear: The future of infrastructure financing is green, or there’s no future at all.


Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals
Updated 02 February 2023

Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

RIYADH: The Saudi Arabian Oil Co., also known as Saudi Aramco, has reduced material and logistics supply chain emissions by 23 percent since 2015, the chairman Yasir Al-Rumayyan revealed in an exclusive interview with Arab News.

Aramco’s iktva program is playing a key role in helping the oil giant achieve its long-term sustainability goals by making sure that its suppliers are evaluated and rewarded for their local environmental, social and governance contribution.

“Sustainability has always been part of the iktva model. We are embracing new technologies, harnessing the Circular Carbon Economy framework and empowering people to enhance our sustainability and reduce our environmental impact,” said the Aramco chairman.

“It’s worth noting that our material and logistics supply chain Scope 1 and 2 emissions have been reduced by 23 percent since 2015,” he added.

Scope 1 emissions refer to the direct emissions from owned or controlled sources, whereas Scope 2 emissions relate to the indirect emissions that come from the generation of electricity, steam, heating, and cooling used by a firm.

As well as having an impact on sustainability, iktva also plays a role in backing the growth and development of the local economy, Al-Rumayyan noted.

As of today, Aramco has a local supply chain comprising an estimated 1,000 local manufacturers and more than 2,000 service providers, the chairman disclosed.

“The program creates an ecosystem of integrated value chains that help businesses operate efficiently in Saudi Arabia. In addition, iktva rewards suppliers for establishing regional headquarters in Saudi Arabia,” he said.

With regards to efficiency, the chairman noted that it all goes back to investment in a skilled network of local suppliers which automatically leads to resilience when it comes to supply chain matters.

Both local and international suppliers are required to meet certain criteria in order to be able to work with the oil and gas giant. The criteria includes establishing local manufacturing facilities, recruiting Saudi employees, investing in research and training, among others.

“This steady progress towards supply-chain localization has not only benefited our company, but also the local and national economy. The impact is expected to continue through growth in exports and increased employment opportunities,” the chairman told Arab News.

Speaking of milestones, Al-Rumayyan emphasized that Aramco achieved a 63 percent iktva score, implying that 63 percent of the firm’s expenditures on suppliers has remained within the Kingdom.

Moreover, Aramco also recorded a 40 percent surge in suppliers’ spend on Research and Development in the Kingdom compared to 2021 levels.

Meanwhile, suppliers’ expenditure on small and medium enterprise development rose 120 percent between 2021 and 2022, thereby propelling supply chain evolution, he exposed.

“Since 2015, we have signed 182 agreements with a total value of $31 billion to build long term collaborative relationships with strategic suppliers, drive further investments, and promote local content,” Aramco chairman stressed.

The goal of those agreements, which pose as Corporate Purchase Agreements, is to provide suppliers with long-term visibility of demand; therefore, enabling them to forecast and project future growth and drive localization efforts accordingly, he explained.

The iktva program was launched with the vision of building a diverse and internationally competitive industrial base in Saudi Arabia. Looking at the bigger picture, this annual gathering is also designed to help the community further innovate, collaborate, and network.

In terms of investments, the event has managed to identify over 200 investment opportunities with an annual market share estimated to stand at $16 billion across 10 different sectors.

“We are continuously looking for companies who share our vision of sustainable growth, and to build win-win strategic partnerships. Together, we aim to stimulate innovation, diversify industry, and produce quality jobs for a growing Saudi population,” Al-Rumayyan concluded.