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Saudi Sovereign Fund Backs Riviera of the Middle East

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Saudi Arabia’s Public Investment Fund (PIF) has a domestic mandate to identify potential projects that can generate returns, while diversify the economy from non-oil sources. A new luxury destination, “Amaala,” is being planned to encourage tourism at Saudi Arabia’s Red Sea coast. This is the third project planned in the area. Saudi Arabia’s sovereign fund will provide the first round of funding. Private corporations are expected to later join in with additional financing. The 3800 square kilometer project will capitalize on the trend in healthy lifestyles. Meditation and specialty treatments will be available, and the “transformational luxury experience” is intended to serve as a driver of foreign investment. It could also create 22,000 employment opportunities along the northwest coast. There will be arts, culture, fashion, and sports on offer, giving visitors a unique and customizable itinerary.

Amaala comes as the latest addition to Saudi Arabia’s Vision 2030 campaign, which also includes The Red Sea Project, a global tourist center, and NEOM, a new economic zone and travel destination. The Red Sea Project and NEOM are similarly financed by the Public Investment Fund. Saudi Vision 2030 is, primarily, a campaign to reduce Saudi Arabia’s dependence on oil revenue. Amaala will be built in the Prince Mohammed bin Salman Natural Reserve. The resort will consist of three sites, and is being planned to co-exist with the current marine ecosystem. There will be 700 residential villas, apartments, and homes built. Hotels will boast 2,500 rooms, and over 200 retail operations will be created, with art, clothing, and dining vendors. According to the PIF, the new destination will be known as “the Riviera of the Middle East.”

In June 2018, Saudi Arabia King Salman issued a royal order creating the Council of Royal Reserves under the chairmanship of the Crown Prince. A number of reserves were created including the Prince Mohammed bin Salman Natural Reserve which is an area between the NEOM project, the Red Sea, and the Al’A-ala Project.

Reserves Created by June 2018 Royal Order
1. Rawdhat Khuraim Reserve
2. Mahazah Al-Sayad Reserve
3. Al-Taysiyah Reserve
4. Al-Tanhat and Al-Khafs Reserves
5. Al-Khanfa, Al-Tubaiq and Hurra Al-Hurra Reserves
6. Prince Mohammed bin Salman Reserve

GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Trump Wants Pharma Companies to Disclose Drug Prices in Advertisements

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U.S. President Trump is progressing on plans to mandate pharmaceutical companies to reveal their prices in drug advertisements. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Health and Human Services Secretary Alex Azar said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further.”

The U.S. Health and Human Services Department would require pharmaceutical companies to include drugs’ sticker prices in their video advertisements. This would be similar to how drug companies disclose the laundry list of side effects.

Increasingly, sovereign funds like Temasek Holdings have backed mid-stage pharmaceutical companies and other therapies, while market investors like Norway’s GPFG have large holdings in listed pharmaceutical companies.

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Kazatomprom Treads Closer to IPO

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Kazatomprom is the world’s biggest uranium producer, accounting for around 20% of production market share. The company is moving forward on floating up to a 25% company stake for its planned initial public offering in London and Astana, Kazakhstan. Kazatomprom’s IPO plans are subject to market conditions. The global market price of uranium generated significant price gains year-to-date through almost three quarters. So far, during 2018, the uranium spot price has moved from US$ 20 per pound to US$ 27 per pound.

Kazatomprom’s sole shareholder is Samruk-Kazyna. Samruk-Kazyna would retain at least a 75% stake in the company.

Advisors

Credit Suisse and JPMorgan are joint global coordinators and joint bookrunners for the share offering. China International Capital Corporation, Halyk Finance, and Mizuho International plc were joint bookrunners.

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