#Saudi Wealth Fund Sells Mecca Developer Shares For $253 Million - Bloomberg

Saudi Wealth Fund Sells Mecca Developer Shares For $253 Million - Bloomberg

Saudi Arabia’s Public Investment Fund raised about $253 million by trimming its stake in a Mecca-based property developer that’s become the kingdom’s best-performing equity listing this year.

The sovereign wealth fund sold 48 million shares or a 3.3% stake in Umm Al Qura for Development & Construction at 19.80 riyals apiece, a 9.92% discount to the last close. The block trade was handled by Citigroup Inc., SNB Capital and EFG Hermes. Following the sale, the wealth fund’s holding drops to 16.3%, with the remainder subject to a 90-day lockup.

Shares in the company, which is developing a $27 billion project in the Muslim holy city, have risen 47% this year, despite a slight pullback this month in line with broader weakness in Saudi stocks. It’s still the kingdom’s best debut this year, driven by enthusiasm around Saudi Arabia’s push into religious tourism as a key pillar to diversify its economy away from oil.

Saudi Arabia has been the Middle East’s most active IPO market this year, with companies raising nearly $4 billion. Still, performance has been uneven, with only two of the ten biggest listings currently trading above their offer prices. The Tadawul All Share Index is also among the worst performers in emerging markets, weighed down by concerns over prolonged oil-price weakness and the potential impact on government spending.

The PIF, as the wealth fund is known, has played a central role in deepening the kingdom’s capital markets by floating portfolio companies in recent years. These share sales have also been a tool to fund Saudi Arabia’s trillion-dollar economic transformation programme, which the wealth fund helms.

But the PIF has slowed the pace of listings amid softer market conditions, including in firms such as Saudi Global Ports, Bloomberg News has reported. The sell-down in Umm Al Qura represents the fund’s first share sale in over a year, after it raised about $1 billion by selling a stake in the kingdom’s main mobile-phone operator, Saudi Telecom Co.

Aramco Is Said to Pick Citi for Oil Storage Terminals Stake Sale - Bloomberg

Aramco Is Said to Pick Citi for Oil Storage Terminals Stake Sale - Bloomberg

Saudi Aramco has chosen Citigroup Inc. to help arrange a potential multibillion-dollar stake sale in its oil export and storage terminals business, according to people familiar with the matter.

The US investment bank was selected in recent days after a pitching process that drew proposals from several other Wall Street lenders, the people said, asking not to be identified as the matter is private.

The mandate is a win for Citigroup, whose Chief Executive Officer Jane Fraser has made a renewed effort to win business from large corporates and sovereign wealth funds in the Middle East. Aramco had tapped JPMorgan Chase & Co. as a sell-side adviser when it previously sold stakes in its oil and gas pipeline infrastructure in separate transactions.

The Saudi oil giant is expected to kick-off a formal sale process as early as next year and is likely to see interest from large infrastructure funds, the people said. Discussions are at an early stage and no final decisions have been made on the timing or structure of the transaction, they said.

Representatives for Citigroup and Aramco declined to comment.

Aramco is considering options including selling an equity stake in the business, Bloomberg News reported this week. It aims to raise billions of dollars from such a sale, people familiar with the matter said at the time.

The plans are part of a broader attempt by the firm to sell a range of assets, including potentially part of its real estate portfolio.

Oil prices have dropped about 16% this year and while the impact of that drop on Aramco’s earnings has been tempered by higher output, the firm has delayed some projects and looked to sell assets to free up cash for investments.

The deals now being considered would mark a step up from previous transactions that were focused on stakes in pipeline infrastructure.

Aramco’s main oil storage and export infrastructure is located at Ras Tanura on the Persian Gulf and the company has similar terminals on the Red Sea. Internationally, the firm owns stakes in product terminals in the Netherlands and leases crude as well as product storage at main trade hubs in Egypt and at Okinawa in Japan.

Earlier this year, a BlackRock Inc-led group signed an $11 billion lease deal for facilities that serve Aramco’s Jafurah gas project in the kingdom.

Most Gulf markets retreat on weak oil prices | Reuters

Most Gulf markets retreat on weak oil prices | Reuters

Most stock markets in the Gulf ended lower on Wednesday, as easing oil prices weighed on sentiment, though losses were capped by growing expectations of a U.S. Federal Reserve rate cut in December.

Crude prices, a catalyst for the Gulf's financial markets, were steady on Wednesday after sliding to a one-month low in the previous session, as investors assessed prospects of oversupply and talks over a Russia-Ukraine peace deal.

Saudi Arabia's benchmark index (.TASI), opens new tab dropped 0.5%, hit by a 1.1% fall in Al Rajhi Bank (1120.SE), opens new tab.

Elsewhere, shares of Umm Al Qura for Development and Construction Co (4325.SE), opens new tab plunged 9.1%, its biggest intraday fall since April - after Saudi Arabia's Public Investment Fund disclosed on Wednesday that it had generated 950 million riyals ($250 million) by selling a 3.3% stake in the company.

Bearish sentiment triggered widespread selling across nearly all sectors. The persistent slump in crude oil continued to weigh on the market, as investors factored in possible progress in Russia-Ukraine negotiations and a projected sizable supply surplus in 2026, said Milad Azar Market analyst at XTB MENA.

"Additionally, liquidity continues to be strained by the continuous initial public offerings."

Among other losers, oil behemoth Saudi Aramco (2222.SE), opens new tab was down 0.2%.

Dubai's main share index (.DFMGI), opens new tab fell 0.3%, with toll operator Salik Co (SALIK.DU), opens new tab losing 0.7%.

In Abu Dhabi, the index (.FTFADGI), opens new tab was down 0.3%.

The Qatari index (.QSI), opens new tab rose 0.8%, with Qatar National Bank (QNBK.QA), opens new tab, the Gulf's biggest lender by assets, advancing 1.6%.

Data released on Tuesday showed U.S. retail sales rose less than forecast in September, while the Producer Price Index climbed 2.7% year-on-year through September, matching the prior month-earlier gain.

The figures followed a series of dovish comments from Federal Reserve officials in recent days.

U.S. monetary policy shifts have a significant impact on Gulf markets, where most currencies are pegged to the dollar.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab dropped 0.9%, with Commercial International Bank (COMI.CA), opens new tab retreating 1.9%.

Oman bourse was closed for a public holiday.

Three ‘Heathrows’ of growth: the unstoppable rise of Middle East airports

Three ‘Heathrows’ of growth: the unstoppable rise of Middle East airports

As airports in the Middle East expand, they are facing new competition: each other. 

The region’s hubs in Dubai, Abu Dhabi, Turkey and Saudi Arabia are on an expansion drive that will see them add hundreds of millions of passengers in the coming decade — the equivalent of at least three Heathrows. 

Dubai, which was once the same size as London’s Gatwick serving around 30mn people a year, plans to increase annual capacity to more than 200mn. Istanbul is also targeting a similar level of passengers, while Saudi Arabia has ambitions to develop its own regional mega-hub through its new airline, Riyadh Air. 

In the past, the region’s airports eyed Europe’s leading hubs such as Heathrow, Frankfurt and Schiphol as competitors. But as they have grown, executives say they will need to win business from each other. 

Dubai — the Gulf’s original hub airport — believes its heft will help it fight off the competition. 

“We will be the black-hole mega hub that sucks in demand all over the region,” predicts Paul Griffiths, chief executive of Dubai Airports. 

Already the largest in the world, it expects to pass 100mn visitors a year by 2027 — but is working on a new site that can accommodate 260mn passengers annually. Even this will be full by 2050, he expects, based on its passenger forecasts. 

In contrast, Dubai’s UAE rival Abu Dhabi can accommodate 45mn passengers a year. Its main airline, Etihad, was expected by financiers to begin proceedings to list this year, though it has yet to do so. 

“We have one-third of the world’s population within four hours [flying time], and two-thirds within eight hours, that’s one hell of a catchment area,” Griffiths said. 

Part of the Gulf’s growth has been fuelled by the region’s airlines offering plush cabins, such as private suites, and services such as on-demand dining. Qatar Airways, for example, serves caviar in business class, and the carriers’ drive for ever more competitive luxury has led to rising prices. 

The Middle East hubs have had the geographical advantage as the world became more connected. 

“One of the reasons why Dubai, Qatar and Istanbul have been in the front of the line is because of their location advantage,” said Selahattin Bilgen, chief executive of Istanbul airport. 

“Thirty or forty years ago most of the aviation movements were between North America and Europe. But now it’s not the case. Istanbul being located in the middle of Africa, Asia and Europe gives a huge advantage.” 

European airlines have also been prevented from flying over Russia after its 2022 invasion of Ukraine — adding hours to flights to Japan, India and China and ceding the time advantage that Europe traditionally had over Emirati rivals. 

However, the West’s legacy carriers remain confident they can still offer customers advantages. 

“People don’t want to go over to Dubai for every single connection,” said Sean Doyle, chief executive of British Airways, who points to the carrier’s extensive network. 

“If we have a competitive product and we’re flying directly to more places from London than anybody else, I’m pretty confident that people will vote with their feet,” he said. 

Nevertheless, backed by governments with tourism and aviation part of their growth strategy, the Middle Eastern hubs are bullish despite the regional tensions that can disrupt travel. 

Riyadh Air, wholly owned by Saudi’s Public Investment Fund, has an explicit goal from Crown Prince Mohammed bin Salman to put the Kingdom on the world’s travel map as part of wider efforts to diversify its economy away from oil. 

The carrier, which launched its inaugural London to Riyadh flight last month for PIF staff, will take public bookings from Christmas and aims to connect 100 destinations within five years. It has ordered 182 aircraft as part of a “multiple tens of billions” bet on rising tourism and connectivity. 

Riyadh is currently poorly connected — with anyone wanting to visit from locations such as Tokyo, Shanghai or the US forced to transfer elsewhere. 

“That’s simply unacceptable,” said Tony Douglas, Riyadh Air’s boss, adding that “we have a mandate to resolve that”. His ambition is to become, over time, more of a “global connector”. “If you’re a resident of Riyadh in Saudi, and want to get to other cities, you shouldn’t have to go to Doha or Dubai or somewhere else to connect.” 

Although not located in the Gulf, Istanbul’s airport rivals those further south as a centre for connecting flights — as well as Istanbul being a tourist destination in its own right. 

It opened a brand new airport in 2018 that can process 90mn people annually, replacing a landlocked predecessor Atatürk Airport, which was closed the following year. 

Three further expansion phases, taking it to six runways, could eventually see Istanbul expand to cater for 200mn people annually, a size rivalling an expanded Dubai. 

The rivalry between the airports has led to competition for staff, with the hubs poaching executives and IT professionals from each other. 

Istanbul airport’s chief planning officer and head of IT have recently both been hired by Dubai to help with its new expansion. Bilgen said the hub was aiming to be prepared for the loss of experts. “We are running some projects to keep our talent, second to grow new talent to replace the ones who were lost,” he said. 

Growth has brought a spiral effect to the Middle East hubs, he added, as “the more connected you are, the more attractive you are [to airlines], and the more airlines come to you, the more connectivity you have,” he added. 

In the long term, increasing the number of tourists travelling to the Gulf — rather than relying on passengers connecting to flights to other regions such as Asia — is key to safeguarding growth for airports, executives say. 

“I don’t think many people will make that trip [to the Middle East] at the moment if there’s only one city to visit,” said Dubai’s Griffiths. 

Dubai itself may have had 19mn visitors last year, up 9 per cent from a year before, but “if you add all of the sites in Saudi, if you add Jordan, Oman and you popularise all those tourist destinations, you will exponentially grow the market for tourism. And I think that’s what is likely to happen,” he said.