CGI Gulf Insights of the Week

  • ByCGI Gulf Insights of the Week
  • Monday, 13 January 2020
  • Published inJanuary 2020
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Country Risk Update - Saudi  Arabia

Risk Indicator  - DB3c
Risk Level        - Slight 

Ratings Trend  - Deteriorating

Falling oil prices over the next five years will see the government forced to liberalize the economy, opening up opportunities for cross-border investment and trade. Longer-term growth will be driven by government reforms under its Vision 2030, which aims to reduce dependence on oil export revenues and boost the private sector.

Market Overview
Dubai's Amanat weighs acquiring VPS Healthcare stake
Amanat Holdings PJSC, the Dubai-based investment firm, is considering acquiring a stake in Middle Eastern hospital operator VPS Healthcare Group. The talks are an early stage and a deal is dependent on commercial and business reviews, Amanat said in a statement on 12 January 2020, after Bloomberg reported the companies are in negotiations. Amanat is working with JPMorgan Chase & Co. on the deal. Amanat is seeking to grow its health-care portfolio in the Middle East as it expects the sector to expand at a compound annual growth rate of 6.7% by 2022. It sees government health-care spending to rise to $30.5 billion by 2021. Still, the potential deal comes at a challenging time for regional hospital operators. NMC Health Plc, a larger London-listed rival, has been facing allegations by Carson Block’s Muddy Waters Capital LLC that the company’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt. NMC has called those claims are unfounded and vowed to conduct an independent review. Shares of Amanat have lost 48% of their value from their January 2018 peak, giving the company a market value of 1.96 billion dirhams ($532 million) in Dubai.
Dubai mortgage lender says close to debt restructuring approval
Dubai-based Islamic mortgage provider Amlak Finance has announced that it has achieved 95 percent approval on its debt restructuring terms. The remainder 5 percent represents only three creditors out of 27 and negotiations with them are currently underway. Amlak said it continues to work with creditors to resolve outstanding matters and in line with the Company’s broader strategy. Amlak, in which Emaar Properties holds a 45 percent stake, is restructuring its debt again after it agreed to new terms on $2.7 billion of loans in 2014. Arif Abdulla Alharmi Albastaki, managing director and CEO of Amlak said: “I am delighted to report that Amlak has made remarkable progress in the debt restructuring negotiations with its creditors. "Reaching the 95 percent approval rate was challenging and pushed us to create innovative solutions to satisfy the different types of creditors we are dealing with. "As we work to complete the negotiations with the remaining creditors, I am confident that we will receive their approvals shortly and the resolution will be in the benefit of Amlak and all parties involved. "We have already paid 42 percent of our Islamic deposits liabilities relating to financiers and 92 percent of our Islamic deposit liabilities relating to liquidity support providers."
UAE receives over 3.2m VAT refund applications for tourists in 2019 
More than 300,000 individuals and tax groups have registered for value-added taxes in the two years since the system was put in place, according to the UAE’s Federal Tax Authority (FTA). In a statement marking two years since VAT came into force on January 1, 2018, the FTA also said a total of 3.2 million electric tax refund applications for tourists had been received by the end of 2019, compared to 1.52 million applications by the end of June – an increase of 1.68 million applications with a growth of 110.53 percent in the second half of 2019. The daily average number of tax refund applications for tourists, the statement added, rose 2.64 fold, from 372,000 applications in the first month of application to 983,000 a day in December 2019.  “The FTA started implementing the VAT refund mechanism for foreign visiting businesses as of last April,” Khaled Al-Bustani, the director-general of the FTA, added. “The mechanism has witnessed remarkable activity and steady growth in its operations.” “The number of VAT refund requests dealt with through this mechanism reached 105, with a total monetary value exceeding AED 28.7 million, enhancing the attractive environment for investments to support economic activities,” Al-Bustani said.
Saudi Aramco unit plans to launch a new $500m fund
Saudi Aramco Energy Ventures, a unit of the kingdom’s energy company, is preparing to start a new fund this year after completing $500 million in investments. The new fund will also be roughly $500 million in size, Majid Mufti, the company’s chief executive officer, said in an interview on the sidelines of an energy conference in Abu Dhabi. It will be financed primarily by returns on the previous investment, which has backed 45 technology companies, primarily in the US and Europe, since 2012. The venture capital firm opened an office in Beijing in December, Mufti said.
Abu Dhabi's Mubadala sells $947m stake in Italian bank UniCredit 
Abu Dhabi sovereign wealth fund Mubadala has more than halved its shareholding in Italian bank UniCredit as the holder of about 6 percent of the world’s oil reserves sells stakes in overseas assets. The fund’s stake declined to about 2.02 percent as of December 20, according to a filing by the Italian market regulator, down from a 4.99 percent stake in June, Consob said in a statement late on 7 January 2020. The stake sold by the fund is valued at about 850 million euros ($947 million) based on yesterday’s closing price. Representatives for Mubadala and UniCredit declined to comment. Abu Dhabi’s fund bought the stake in 2010 as part of its strategy to diversify investments from the emirate’s oil-based economy. At the time, the holding was valued at about 1.8 billion euros. The fund started as a means of diversifying the economy by attracting expertise and jobs to the emirate, which is now a global investing powerhouse. The fund has invested in Greek fish farming, Europe’s biggest electric-scooter-sharing company, and a Canadian data center. The fund cut its stake less than one month after UniCredit CEO Jean Pierre Mustier announced a new business strategy, aimed at rewarding investors through 2023 through share buybacks and dividends totaling 8 billion euros.
Commodity Tracker
Business Updates
Dun & Bradstreet, a leading global provider of business decisioning data and analytics, today announced the acquisition of Orb Intelligence, prominent digital business identity and firmographic data provider. The acquisition, in combination with the July 2019 acquisition of Lattice Engines, furthers the commitment and investment Dun & Bradstreet has made to provide its clients with the best-in-industry data, analytical applications, and technology. 
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