Microsoft to invest $1.5bn in UAE-based AI firm G42 

Microsoft to invest $1.5bn in UAE-based AI firm G42 
Brad Smith, vice chair and president of Microsoft; Sheikh Tahnoon bin Zayed Al-Nahyan, chairman of G42; and Peng Xiao, group CEO of G42. Supplied
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Updated 16 April 2024

Microsoft to invest $1.5bn in UAE-based AI firm G42 

Microsoft to invest $1.5bn in UAE-based AI firm G42 

RIYADH: Global tech giant Microsoft will invest $1.5 billion in the UAE-based artificial intelligence technology company G42, aiming to offer the latest AI solutions and skilling initiatives.      

As part of the deal, G42 will grant the US firm a minority stake and Brad Smith, Microsoft’s vice chair and president, will join the Emirati firm’s board of directors, according to a press release.  

G42 will utilize Microsoft Azure to run its AI applications and services, partnering to deliver advanced solutions to global public sector clients and large enterprises.

Smith said: “Our two companies will work together not only in the UAE, but to bring AI and digital infrastructure and services to underserved nations.”     

He added: “We will combine world-class technology with world-leading standards for safe, trusted, and responsible AI, in close coordination with the governments of both the UAE and the United States.”    

The companies will collaborate to bring advanced AI and digital infrastructure to nations in the Middle East, Central Asia, and Africa, ensuring equitable access to services to address critical governmental and business concerns, while upholding high levels of security and privacy, the release added. 

“Microsoft’s investment in G42 marks a pivotal moment in our company’s journey of growth and innovation, signifying a strategic alignment of vision and execution between the two organizations,” said Tahnoon bin Zayed Al-Nahyan, chairman of G42.     

“This partnership is a testament to the shared values and aspirations for progress, fostering greater cooperation and synergy globally,” he added.   

The agreement also encompasses a $1 billion investment in a fund for developers, which aims to bolster the creation of a skilled and diverse AI workforce, as well as foster innovation and competitiveness for the UAE and the broader region. 

“This partnership significantly enhances our international market presence, combining G42’s unique AI capabilities with Microsoft’s robust global infrastructure. Together, we are not only expanding our operational horizons but also setting new industry standards for innovation,” said Peng Xiao, group CEO of G42. 

The release stated that this expanded collaboration will empower organizations of all sizes in new markets to harness the benefits of AI and the cloud, while ensuring they adopt AI that adheres to world-leading standards in terms of safety and security. 

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 
Updated 5 sec ago

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

Oman sees hotel revenue rise 10.2% thanks to European-led tourist surge 

RIYADH: European travelers to Oman helped fuel a 10.2 percent rise in hotel revenue in the first five months of 2024, official data has revealed.

Figures from the National Centre for Statistics and Information show that three to five-star facilities in the country pulled in over 108.3 million Omani rials ($281.5 million) over the period, compared to 98.3 million rials in 2023.

Revenue growth was fueled by a 13.7 percent surge in the total number of hotel guests, with 286,980 European visitors — a 19.6 percent increase over the first five months of 2023.

Simultaneously, the hotel occupancy rate rose by 6 percent to reach 51.5 percent, compared to 2023.

Oman’s substantial increase in European visitors and strong local and regional turnout mirrors the broader strategy of diversifying tourist demographics and bolstering the hospitality sector seen across the GCC.

Similar to Oman, Saudi Arabia has topped the UN Tourism’s ranking for the growth of international tourist arrivals in 2023 compared to 2019 among large destinations, achieving an increase of 56 percent over that tiem, according to the World Tourism Barometer report released in January.

The NCSI report provides a detailed breakdown of the nationalities among the hotel guests in Oman during the first five months of 2024.. 

Among them, 306,255 were Omani citizens, reflecting a substantial local turnout with an 11 percent surge.

The number of Gulf Cooperation Council citizens visiting the Sultanate also increased, reaching 58,572 guests, up 6.8 percent comparted to the same period in 2023.

Additional Arab tourists contributed to the growth, with 40,548 travelers, marking a modest but positive 13.2 percent increase.  

Citizens from African countries demonstrated strong interest, with a rise of 1.6 percent, resulting in 4,677 visitors. 

Guests from the US also significantly contributed to the tourism growth, with the number of travelers reaching 28,695.

Additionally, guests from Oceania countries totaled 13,446 visitors.  

In addition, Oman’s airports handled more than 4.9 million passengers and 31,708 flights by the end of April.

Muscat International Airport saw 4.4 million passengers, a 16.8 percent increase, with 4.09 million international and 332,391 domestic passengers.

Indians topped the number of passengers through Muscat International Airport by the end of April, with 89,206 arrivals and 83,855 departures. 

They were followed by Bangladeshi nationals with 12,829 incoming and 20,597 outgoing passengers, and Pakistani nationals with 21,191 arrivals and 19,532 departures.

Sohar Airport served 22,390 passengers on 192 flights, while Duqm Airport carried 20,106 passengers on 208 flights.

Closing Bell: Saudi main index gains 66 points to 11,948 

Closing Bell: Saudi main index gains 66 points to 11,948 
Updated 22 min 51 sec ago

Closing Bell: Saudi main index gains 66 points to 11,948 

Closing Bell: Saudi main index gains 66 points to 11,948 

RIYADH: Saudi Arabia’s Tadawul All Share Index continued its upward movement on Monday, as it gained 66.15 points to close at 11,947.70.  

The total trading turnover of the benchmark index was SR7.18 billion ($1.91 billion), with 105 of the listed stocks advancing and 116 declining.  

On the other hand, Saudi Arabia’s parallel market Nomu edged up by 0.60 percent to close Monday’s trading at 25,849.92.  

The MSCI Tadawul Index also gained 9.83 points to 1,497.85.  

The best-performing stock on the main market was Al Sagr Cooperative Insurance Co. The firm’s share price surged by 10 percent to SR20.68.  

Other top performers were National Gas and Industrialization Co. and Aljazira Takaful Taawuni Co., whose share prices soared by 6.01 percent and 5.32 percent, respectively.  

Similarly, the share prices of Makkah Construction and Development Co. and United Cooperative Assurance Co. also increased by 4.77 percent and 3.72 percent, respectively.  

The worst performer of the day was Al Taiseer Group Talco Industrial Co., as its share price dropped by 7.72 percent to SR65.70.  

On the other hand, the positive performance of Nomu on Monday was driven by Future Care Trading Co. and National Building and Marketing Co., whose share prices surged by 10.34 percent and 10 percent, respectively.  

The worst performer on the parallel market was Ladun Investment Co. The firm’s share price slipped by 7.42 percent to SR2.87.  

On the announcements front, Sure Global Tech Co. said it signed a contract worth SR51.99 million to develop a digital platform for the Entrustment and Liquidation Center, also known as Infath.  

In a Tadawul statement, the company said that the three-year contract will have a positive impact on its financials from 2024 through 2026.  

Meanwhile, Naseej for Technology Co. announced that it signed a contract worth SR11.3 million with the National eLearning Center.  

According to a Tadawul statement, the scope of the contract includes managing and operating NELC’s learning management system to enhance confidence in e-learning and lead sustainable innovation in Saudi Arabia.  

The statement added that the contract which is valid for 36 months is expected to positively impact Naseej Tech’s financial performance in 2024, 2025, and 2026. 

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz
Updated 15 July 2024

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

Saudi Arabia leads GCC IPO market with $2.1bn raised in first half of 2024: Markaz

RIYADH: Saudi Arabia led the Gulf Cooperation Council’s initial public offering market in the first half of 2024, raising $2.1 billion in what was an annual increase of 141 percent, an analysis has revealed.

In its latest report, Kuwait Financial Center, also known as Markaz, noted that the Kingdom saw 19 offerings in the six months to the end of June. accounting for 59 percent of the total IPO proceeds in the GCC region. These included $1.95 billion listed in its main market and $143 million in the parallel market, also known as Nomu. 

Saudi Arabia’s ambitious privatization and diversification efforts across sectors such as healthcare, technology, and renewable energy have significantly broadened the market’s appeal.  

These initiatives offer investors exposure to high-growth industries, positioning the Kingdom as an attractive destination for investment in sectors poised for substantial development and innovation. 

Led by its pivotal Capital Market Authority advancing Vision 2030 goals, the Saudi capital market is on a journey of expanision, and saw net foreign investment reach SR198 billion ($52.79 billion) in 2023 – a 7.7 percent annual increase, according to CMA’s June report. 

Top IPOs 

Among the top five GCC IPOs by proceeds in the first half of this year, the Markaz report noted that Dr. Soliman Abdulkader Fakeeh Hospital Co., listed on Saudi Arabia’s main market, raised $764 million, making it the largest IPO during that period. 

The healthcare firm offered 49.8 million shares, representing a 21 percent stake, and received an oversubscription of 119 times. The IPO proceeds accounted for 21 percent of the total GCC IPO proceeds during the period. 

Alef Education, listed on the Abu Dhabi Securities Exchange, secured the second spot with its IPO raising $515 million in proceeds.  

The company offered 1.4 billion shares, representing a 20 percent stake, which was oversubscribed 39 times.  

According to Markaz, Alef Education’s proceeds constituted 14 percent of the total GCC IPO proceeds during the period. 

Parkin Co., listed on the Dubai Financial Market, raised $429 million, making it the third-largest listing in the GCC region in the first half of this year.  

The parking facility provider offered 750 million shares, equivalent to a 25 percent stake. The IPO proceeds constituted 12 percent of the total GCC IPO proceeds during the period and were oversubscribed 165 times. 

Meanwhile, Spinneys Co., also listed on DFM, raised $375 million in proceeds. The supermarket chain offered 900 million shares, representing a 25 percent stake, and was oversubscribed 64 times.  

Markaz revealed that Spinneys Co.’s proceeds constituted 11 percent of the total GCC IPO. 

Similarly, Modern Mills Co., listed on Saudi Arabia’s main market, raised $314 million through the sale of 24.5 million shares, or a 30 percent stake, and was oversubscribed 127 times.  

Modern Mills Company's IPO constituted 9 percent of the total GCC IPO proceeds. 

GCC IPO market 

The overall GCC region experienced a decline in IPO activity in terms of value, with total proceeds amounting to $3.1 billion from 23 offerings in the first half. This represents a 32 percent decline compared to the same period of the previous year. 

In the UAE, IPO proceeds totaled $1.3 billion in the first six months of this year, marking a year-on-year decrease of 67 percent. Of this amount, DFM hosted $805 million, constituting 23 percent of the total GCC IPO funds in the first half. 

Similarly, ADX recorded $515 million in IPO capital, accounting for 14 percent of the total GCC IPO funds during the period. 

Meanwhile, Kuwait saw IPO funds totaling $147 million during the same period, accounting for 4 percent of the total GCC IPO value and listed on Boursa Kuwait. 

The report revealed that the healthcare sector accounted for nearly 22 percent of the total funds raised during the first half of this year through three offerings, totaling $788 million. 

In contrast, the technology sector raised over $515 million during the same period, constituting 14 percent of the total GCC IPO proceeds. 

Similarly, new listings from the industrial sector constituted 12 percent of the region’s total funds, followed by the consumer staples industry and the food and beverages sector at 11 percent and 9 percent, respectively. 

Additionally, the commercial and professional services industry contributed 8 percent to the region’s total IPO funds, closely followed by the insurance sector at 6 percent. 

Middle East IPOs  

Overall, IPOs in the Middle East are set for continued positive aftermarket performance this year, following significant gains in the first quarter, as reported by PwC in May. 

It also highlighted that the Saudi Stock Exchange has emerged as a dominant force in the GCC equity market. 

In the same month, Mohammed Al-Rumaih, CEO of the Saudi Exchange, noted that the introduction of ‘Market Making’ and the debut of ‘Single Stock Options’ have enhanced Tadawul's appeal among international investors. 

Earlier this month, another report released by CMA noted that 42 companies listed in Saudi Arabia’s benchmark index and parallel market benefitted from the nominal value split mechanism in 2023.  

This followed the CMA’s execution of the Companies Law and its Executive Regulations on Jan. 19, 2023, permitting listed firms to split stock par values from SR10 to various lower options. 

Under this mechanism, a company divides its existing shares into multiples to enhance trading volume and accessibility for investors, without altering its total market capitalization. 

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%
Updated 15 July 2024

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

Saudi banks lead GCC in credit quality with NPL ratio improving to 1.4%

RIYADH: Saudi banks showcased a notable improvement in credit quality in the first three months of the year as the non-performing loan ratio decreased to 1.4 percent, according to data from the Saudi Central Bank. 

The bank, known as SAMA, presented figures that reflect a decline from 1.7 percent in the same period in 2023 and is credited to stronger risk profiles, underscoring the banking sector’s dedication to robust financial practices and effective risk management.

The NPL ratio measures the proportion of a bank’s gross loans that are not generating income because the borrowers have failed to make scheduled payments for a certain period, typically 90 days or more past due.

A lower NPL ratio to gross loans suggests healthier asset quality, suggesting that a smaller percentage of loans are at risk of default. As a percentage of capital, it indicates a more robust capital buffer to absorb potential losses without compromising the overall capital base.

The SAMA data also indicated that Saudi banks have improved their capacity to absorb potential losses from bad loans, as evidenced by the NPL ratio net of provision to capital decreasing from 2.6 percent to 2.2 percent during this period.

In May, Fitch Ratings observed that Saudi banks generally possess the strongest risk profiles among lenders in the key Gulf Cooperation Council markets, supporting their asset quality.

GCC banks’ primary focus on lending underscores the significant role of credit risks, which assess the likelihood of borrowers defaulting, thereby shaping their overall risk profiles.

Saudi banks experienced robust lending growth, approximately double the GCC average from 2022 to 2023, driven by increased government spending and strong non-oil gross domestic product development, the agency noted.

Nevertheless, the Kingdom maintains a healthier loan portfolio with fewer loans at risk of default, which is a result ofeffective risk management strategies, stringent lending standards, and potentially less exposure to high-risk sectors or borrowers.

Globally, Saudi Arabia’s banking system is also recognized for its high levels of capitalization under a strong regulatory framework.

It also stands out as one of the few countries fully compliant with Basel IV regulations, which mandate specific leverage ratios and require banks to maintain designated reserve capital, as reported by the agency in February of 2023.

According to the agency, factors contributing to more robust risk profiles for Saudi banks include SAMA’s reputation as the region’s strictest and most prudent banking regulator.

From 2019 to 2023, the sector cost of risk in the Kingdom averaged 0.6 percent, which is lower than the average costs observed in the UAE, Qatar, and Kuwait, Fitch noted in its February report.

Additionally, the combined ratio of Stage 2 and Stage 3 loans, which indicates potential credit impairments, stood at 7.2 percent, marking the lowest among these four GCC markets. Additionally, they benefit from a larger and more diversified economy and strong retail financing from 2021 to 2023, which reduces borrower concentration.

On average, the 20 largest exposures at Saudi and Kuwaiti banks account for about 20 percent of their loan books, compared to approximately 35 percent at UAE and Qatari banks.

Furthermore, Saudi banks extend lower levels of financing to companies owned or managed by high-net-worth individuals, including royal family members, compared to some UAE and Qatari banks.

Diriyah Club ownership transferred to PIF-owned firm, boosting Saudi sports sector

Diriyah Club ownership transferred to PIF-owned firm, boosting Saudi sports sector
Updated 37 min 16 sec ago

Diriyah Club ownership transferred to PIF-owned firm, boosting Saudi sports sector

Diriyah Club ownership transferred to PIF-owned firm, boosting Saudi sports sector

RIYADH: Saudi Arabia’s sports sector is set for a major boost as ownership of Diriyah Sports Club transfers from the Ministry of Sport to Diriyah Co., a firm owned by the Public Investment Fund.     

Crown Prince Mohammed bin Salman, serving as chairman of the PIF company’s board of directors, has also approved the formation of Diriyah Sports Club’s board, chaired by Prince Khalid bin Saud. Board members include Jerry Inzerillo, Mohammed Al-Khreiji, Ayman Al-Fallaj, and Hamad Al-Bati, according to a statement.  

The moves align with strategic goals to develop and enhance Diriyah as a premier cultural, tourist, entertainment, and sports destination. The initiative also aims to empower the private sector to play a more significant role in the sports field, in line with Saudi Vision 2030 goals. 

Jerry Inzerill, group CEO of Diriyah Gate Development Authority, said: “The decision by the Ministry of Sport to transfer ownership of the Diriyah Sports Club to Diriyah Gate Development Authority will enable the organization to invest in their development, both from a facilities and a talent perspective.”  

He added: “We will be looking at developing a ground-up approach, from enhanced infrastructure to world-class athletic and athlete services, bolstering and growing the player base to enable them to compete at levels that were previously unachievable.”  

Inzerillo further emphasized that this initiative will expand their audience and fan base, encouraging youth and casual players to aspire to higher levels of competition. These efforts align with Vision 2030's goals of promoting wellness, well-being, and inclusive sports participation across all age groups and skill levels. 

Moreover, this initiative is part of the Sports Clubs Investment and Privatization Project, announced by the Crown Prince in June 2023. The project, rolled out in collaboration with the National Privatization Center, aims to accelerate the development of Saudi Arabia’s sports industry by encouraging business sector involvement with clubs.  

Shortly after the project announcement at that time, PIF stated its intention to acquire ownership of Saudi Arabia's four leading football clubs: Al-Ittihad, Al-Ahli, Al-Nassr, and Al-Hilal. 

Founded in 1976, Diriyah Club is gearing up to compete in the Saudi Second Division League for the upcoming 2024/2025 sports season, having been assigned to Group 2 by the Saudi Arabian Football Federation.