The ‘invisible kingpin of data centres’ riding the Gulf’s AI boom

The ‘invisible kingpin of data centres’ riding the Gulf’s AI boom

When an Abu Dhabi artificial intelligence company wanted access to an enormous data centre in France earlier this year, it turned to a former child actor turned investment banker to broker the deal. 

Zachary Cefaratti, founder of boutique advisory Dalma Capital, has leveraged an eclectic contacts book that includes OpenAI chief Sam Altman and senior Middle Eastern politicians to become a below-the-radar fixer for data centres, cryptocurrency mining and technology groups in the Gulf. 

The 37-year-old’s clients include G42, the AI group chaired by powerful Emirati royal Sheikh Tahnoon bin Zayed al-Nahyan; Abu Dhabi sovereign investor ADQ; and the encrypted social media network Telegram, whose founder Pavel Durov lives in Dubai and was detained and charged in France last year. 

According to executives who have worked on transactions with Cefaratti, the Californian is one of a few niche dealmakers to profit from two new trends: the insatiable desire for more computing capacity to run AI, and the Gulf’s desire to fund the nascent technology. 

“I’d like to think that I’m more than just riding a wave,” Cefaratti told the Financial Times. “It’s not completely by accident . . . I spend a lot of time thinking about and researching these things . . . not being like most investment bankers, really getting into the tech.” 

“He’s an invisible kingpin in data centres,” said Andy Tang, partner at Draper Associates. 

Dalma advised companies in the G42 group, including on a “partnership with a tier one hyperscaler”. Microsoft acquired a $1.5bn stake in the Abu Dhabi-based company last year. Cefaratti also sourced the French data centre deal between G42 subsidiary Core42 and France’s DataOne, which closed this year. 

This May, Dalma was joint arranger for Telegram’s $1.7bn bond issuance, which was led by Jefferies. Cefaratti had previously arranged meetings for Telegram with Abu Dhabi investors.  

For Cefaratti, the UAE’s bet on becoming an AI hub is a natural fit: “AI consumes massive amounts of energy and it’s very capital intensive.” The nation can then become “an exporter of intelligence”. 

Cefaratti’s Dubai office features a sculpture of Babar the elephant holding a bag of bitcoin, a gift from the daughter of Dubai property tycoon turned data centre investor Hussain Sajwani. Cefaratti said he counted Binance founder Changpeng Zhao, another UAE resident who served jail time in the US, as a friend. 

The AI boom came after Cefaratti suffered a career low. Between 2019 and 2023, he was investigated by the financial centre’s watchdog, which had become stricter after Dubai investment firm Abraaj imploded under its supervision. 

He was charged with misleading the regulator, and hit with a $162,500 fine and barred from acting as senior executive officer for two years. The Dubai Financial Services Authority accused him of giving “false, misleading and deceptive information” about trades placed in 2016 on Dalma’s behalf, by a person who was not employed by the fund. 

“I think the big mistake I made was not taking it seriously,” said Cefaratti. “It just seemed like such a small thing from so long ago.” 

Cefaratti’s early career was as a child actor appearing in shows such as Star Trek: Deep Space Nine, while his grandmother encouraged him to invest his earnings in bonds and shares. 

He dropped out of college to care for his father in 2009, starting a small health insurance brokerage business to cover medical bills. He returned to his studies and joined students opening a hedge fund; they were mocked as “Clueless Capital”. 

The finance-focused student left an impression on academics at Franklin University Switzerland. Cefaratti was “one of those students you don’t forget”, remarked his former professor Roberto Cordon, saying he would receive emails from Cefaratti at 4am. 

Cefaratti headed to the Gulf in late 2012. “I bought what [Dubai was] selling,” he said. “I probably bought it a little too early.” His fledgling hedge fund Dalma Capital managed just a “couple of million dollars”, and local investment never materialised. 

Pivoting, Cefaratti used his expensive Dubai International Financial Centre licence as a platform for other funds, including one in cryptocurrency, and later started an investment conference. 

In 2018, he decided to expand Dalma into advisory and hired an investment banker from Morgan Stanley. 

“We were getting calls from organisations that have huge portfolios of excess energy that they were looking to monetise,” Cefaratti recalled. These clients included ADQ, which Cefaratti steered into mining bitcoin — a way to convert electricity into cryptocurrency. 

At about the same time, Cefaratti said he was getting to know Draper Associates, which formally appointed him venture partner in 2023. 

As Dubai took off during the Covid-19 pandemic, when it bet on reopening as other cities stayed locked down, Cefaratti said his business finally started to do well. Using venture capital terminology, he said: “That’s when the product market fit aligned.” 

In 2022, he took autonomous driving company Pony.ai on a funding roadshow in Saudi Arabia, alongside investment bank Moelis. The investment fund belonging to giga project Neom later announced a $100mn investment in the Chinese group. Work with G42 and others followed. 

Dalma has just 21 employees. But according to Cefaratti, he is filling a gap. Clients raising funds could just call a bulge bracket bank, but if they are “putting together a complex deal that has multiple layers, that needs customers and technology; there’s not many one-stop shops that can do that”.

Middle East Money Gives Britain a Summer Break From Wealth Chaos - Bloomberg

Middle East Money Gives Britain a Summer Break From Wealth Chaos - Bloomberg

For a few months this summer, parts of Britain’s billionaire economy were back to business-as-usual.

Amid scorching heat in the Middle East, London once again became an outpost for the Gulf elite, continuing an annual custom that helps project their influence in the West and allows an escape to cooler climes. The ruler of Dubai was seen at Harrods, other Middle East royals flocked to equestrian events, while the head of Saudi Arabia’s sovereign wealth fund attended football matches.

They were joined by a well-heeled cast of ministers and tycoons who thronged to the city, filling up some its most exclusive properties, restaurants and private clubs that have suffered in the fallout from the UK recently hiking taxes on its wealthy elite.

In all, visitors to Britain from the United Arab Emirates and other Gulf Cooperation Council territories such as Saudi Arabia and Kuwait are expected to spend a total £3.5 billion ($4.7 billion), a rise of 27% on the previous year, according to the nation’s tourism agency.

The summer influx of Middle East money to the UK – traditionally a global leader in luring the world’s rich — offers respite from the turmoil stemming from the end of a preferential tax regime for wealthy residents hailing from abroad, known as non-domiciled individuals.

In March 2024, the then-Conservative government proposed ending the system that allowed non-doms to avoid UK taxes on their overseas earnings for as long as 15 years, replacing it with a shorter timeframe. Labour mirrored that policy after winning the UK general election last year, but Chancellor of the Exchequer Rachel Reeves went a step further and eliminated inheritance tax breaks on non-doms’ overseas assets, causing many of them to leave or consider relocating.

Keir Starmer’s government is betting that the changes will bring about £33 billion in extra levies over coming years, but think tanks are contesting the figures, warning on the threat to jobs and economic growth.

Billionaires including Checkout.com founder Guillaume Pousaz and Egypt’s second-richest man Nassef Sawiris are among those recently exiting the UK.

As they only usually visit Britain for part of the year, the Middle East’s wealthy elite are typically avoiding any major exposure to these changes.

Still, those staying in Britain throughout the summer months need to remain wary of the nation’s complex rules on testing tax residency, with some curbing that risk by taking short trips to nearby nations such as Italy, one of the biggest winners from Britain’s wealth chaos.

“I have a significant number of clients who are now in the UK,” said Piers Master, a London-based partner at law firm Charles Russell Speechlys who focuses on dealing with ultra-wealthy individuals and families from the Middle East. “They come as early as May and leave as late as September.”

Compared to other UK tourists, Middle East visitors typically stay longer and live more lavishly: in 2024, they were the only group to surpass spending £2,000 on average per trip, based on VisitBritain data released last month. Europeans and US tourists spend more in total, due to the higher numbers of visitors from those places.

The UK’s other Middle East visitors include Sultan Al Jaber, one of the Gulf’s most powerful figures, who stood in Berkeley Square to open a branch of First Abu Dhabi Bank as temperatures crossed 45C (113F) in the UAE.

Ali Al Ali, a Dubai horse-racing executive, donned a coat and tails, a pink waistcoat and sunglasses in June to attend Royal Ascot, one of Britain’s most prestigious equestrian events. At the same gathering, a Saudi prince appeared in the lead royal carriage alongside King Charles and Queen Camilla.

A son of Qatar’s former emir, Sheikh Jassim bin Hamad bin Khalifa Al Thani, and Dubai’s crown prince, Sheikh Hamdan bin Mohammed, also chatted in the stands of another equestrian event in London last month that showcased purebred Arabian horses.

Abu Dhabi’s body-building politician Sheikh Abdulla bin Mohammed Al Hamed flew in for London Tech Week in June before later rubbing shoulders with members of the UK’s creative industry and posting about it on social media. That group included Jared Harris, the British actor who played King George VI in Netflix’s acclaimed TV series “The Crown.”

Further signs of wealthy Arabs holidaying in the UK summer can be seen in the import of Lamborghinis, Ferraris and other luxury cars as part of London’s “Supercar Season.”

In May, car imports from the UAE to the UK were ten times bigger than the previous month, according to data compiled by Bloomberg from official trade statistics. The largest monthly total in at least five years arrived in June.

The following month, a blue-and-white Bugatti supercar with UAE license plates was a center piece for Dubai real estate developer Binghatti opening a premises in London’s glitzy Knightsbridge district, with Hollywood actor Terry Crews helping to draw a crowd at the red-carpeted event.

Middle East wealth is also showcased in British real estate.

Along with Americans, Middle Eastern buyers are now the biggest force in London’s super-prime real estate market. Families typically from the UAE, Qatar and Saudi Arabia are seeking large residences in the £25 million to £150 million range, according to broker Beauchamp Estates.

Some of those who have acquired London homes recently are among the region’s most powerful. UAE President Sheikh Mohammed bin Zayed Al Nahyan bought a mansion in late 2023 in Chelsea, one of London’s most expensive home deals in recent years. A Qatari royal also bought a Grade II-listed mansion two years ago nestled between Hyde Park and Berkeley Square for £39 million. The seller: Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani.

Trevor Abrahmsohn, a property broker whose firm Glentree sells luxury London homes, said about a third of inquiries he’s recently received for a mega-mansion on the market near Regent’s Park came from Middle Easterners. He described its surrounding area in the summer as a “little Arabia.”

The Middle East’s elite “have been massive players for many years” in the UK prime real estate market, Abrahmsohn said. “And that won’t change regardless of the tax regime.”

Most Gulf markets fall on weak oil prices | Reuters

Most Gulf markets fall on weak oil prices | Reuters

Most Gulf stock markets closed lower on Sunday amid falling oil prices, with Saudi Arabia's index declining for the ninth time in 10 sessions.

Oil prices - a catalyst for the Gulf's financial markets - had fallen on Friday as a weak U.S. jobs report dimmed the outlook for energy demand, while swelling supplies may increase further after Sunday's meeting of OPEC and allied producers.

Eight OPEC+ countries agreed to raise oil output in October by 137,000 barrels per day, an OPEC+ source told Reuters while the meeting was underway.

Saudi Arabia's benchmark index (.TASI), opens new tab declined 0.6%, with Al Rajhi Bank (1120.SE), opens new tab declining 1.3% and oil major Saudi Aramco (2222.SE), opens new tab down 0.8%.

In Qatar, the index (.QSI), opens new tab, however, gained 0.3%, helped by a 0.5% rise in Qatar Islamic Bank (QISB.QA), opens new tab.

Figures on Friday showed U.S. job growth weakened sharply in August and the unemployment rate increased to a near four-year high of 4.3%, confirming that labor market conditions were softening and increasing the case for a Federal Reserve interest rate cut later this month.

The Fed’s stance carries weight in the Gulf, where most currencies are pegged to the U.S. dollar, anchoring regional monetary policy.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab declined 0.9%, hit by a 2% slide in Commercial International Bank (COMI.CA), opens new tab.