👋 Good morning, Smashi Business Readers!

Today's highlights showcase the Middle East's dynamic business and tech landscape. Talabat is ready to launch an IPO, eyeing growth across its established GCC markets and expanding service offerings. Meanwhile, the region leads globally in Generative AI (GenAI) adoption, with a McKinsey report forecasting up to $35 billion in economic impact, fueling sectors from retail to finance. In Saudi Arabia, Lean Technologies secured $67.5 million in Series B funding, positioning itself as a leader in MENA’s open banking ecosystem.

Read on for more insights and details!

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Talabat IPO Eyes Growth in Core Middle East Markets Amid Expanding Service Offerings

📰 What is it about?

• Talabat, a subsidiary of Delivery Hero (DHER.DE), has launched its initial public offering (IPO) in Dubai, aiming to leverage growth in its established Middle Eastern markets.

• Delivery Hero is listing 15% of Talabat—equivalent to 3.49 billion shares—which insiders predict could generate over $1 billion, positioning it among the largest IPOs in the UAE this year.

• Talabat, initially founded in Kuwait in 2004, now operates across the UAE, Oman, Qatar, Bahrain, Jordan, Iraq, and Egypt, serving over six million active customers.

💡 Why it matters?

• Talabat’s IPO reflects strategic intentions to deepen its market presence rather than seek expansion into new regions like Saudi Arabia.

• CEO Tomaso Rodriguez explained that the focus would be on growing within current markets with an addressable population of 71 million, highlighting stronger returns in areas where the brand is already established. Key growth plans include boosting customer engagement with its retail and grocery delivery services, expanding beyond food delivery.

• The listing could also attract local and international investors, though no specific valuation has been disclosed. Proceeds from the IPO will go to Delivery Hero for "general corporate purposes." Talabat’s financials indicate strong growth, with gross merchandise value (GMV) reaching $6.1 billion last year and anticipated to grow by 22%-23% in 2024.

• Talabat has additionally outlined a dividend strategy, projecting $100 million in dividends for Q4 2024, with $400 million planned for 2025. In subsequent years, the company aims to distribute at least 90% of its net income in dividends, a compelling offer for potential shareholders.

🔜 What’s next?

• As the IPO subscription opens from Nov. 19 to Nov. 28, Talabat is poised to begin trading on Dec. 10. Backed by major financial entities Emirates NBD, JP Morgan, and Morgan Stanley as coordinators, Talabat’s IPO may strengthen its market foothold in the Middle East.

• The focus on existing markets could translate into a refined, high-return growth model that sustains investor interest.

• Investors will closely monitor Talabat’s post-IPO performance, especially in terms of its expansion into retail and grocery services. The successful adoption of these verticals could be a significant revenue driver, fueling Talabat’s ability to sustain its high dividend distribution model and ongoing regional growth.

📈 Markets

GCC Leads Global Charge in Generative AI Adoption, Expected to Boost Economy by $35 Billion

📰 What is it about?

• A new report from McKinsey highlights the Gulf Cooperation Council (GCC) as a leader in adopting generative artificial intelligence (genAI), with 75% of businesses in the region using genAI in at least one area of operations.

• This surpasses the global adoption rate of 65% and underscores the region’s commitment to digital transformation. According to McKinsey, generative AI could contribute $35 billion annually to GCC economies, equating to approximately 2.3% of the region's GDP.

💡 Why it matters?

• The strong uptake of genAI in the GCC is poised to enhance economic productivity, especially as governments and companies allocate more resources to AI initiatives.

• With 57% of GCC businesses dedicating at least 5% of their digital budgets to AI—compared to only 33% globally—the region is set to benefit substantially from its proactive approach. Beyond genAI, additional AI technologies could contribute up to $150 billion to the GCC’s economy.

• As AI becomes increasingly embedded, governments in the UAE and Saudi Arabia are proactively introducing data sovereignty and data management regulations.

• This strategic regulatory framework ensures data related to key sectors, such as oil and gas, remains within the region, safeguarding economic interests and paving the way for long-term digital growth. Saudi Arabia’s recent data center investments by Amazon and Microsoft indicate regional commitment to secure, scalable AI infrastructure.

🔜 What’s next?

• While generative AI is currently reshaping industries, artificial general intelligence (AGI)—AI that can replicate human intelligence and logic—is viewed as the “next frontier” for global AI development.

• Though AGI remains in the research phase, the GCC’s established AI foundation positions it to capitalize on this technology when it emerges.

• Looking forward, GCC governments will continue to develop regulations to support responsible AI usage, with a focus on creating job opportunities and investing in retraining and reskilling programs.

• As GCC businesses integrate AI, this regulatory support will likely encourage sustainable, long-term growth in the AI sector, further enhancing the region’s economic resilience and technological leadership.

💭Quote of the day
“A man who trusts nobody is apt to be the kind of man nobody trusts.” - Harold Macmillan

Saudi Arabia’s Lean Technologies Raises $67.5M Series B, Aiming to Lead Open Banking in MENA

📰 What is it about?

• Riyadh-based fintech infrastructure company Lean Technologies has raised $67.5 million in a Series B funding round, led by General Catalyst, marking its first investment in a Saudi startup.

• Other key investors in this round include Bain Capital Ventures, Duquesne Family Office, and Arbor Ventures. With this latest investment, Lean’s total funding surpasses $100 million.

• Founded in 2019 by Hisham Al-Falih, Aditya Sarkar, and Ashu Gupta, Lean offers financial APIs for data and payment solutions, enabling businesses across the UAE and Saudi Arabia to develop innovative financial products.

• The company has processed over $2 billion in payment volumes and works with high-profile clients, including e&, DAMAC, Careem, Tawuniya, and Tabby.

💡 Why it matters?

• This funding round underscores the growing importance of fintech in Saudi Arabia and the broader MENA region. With Lean operating in the Saudi Central Bank's regulatory sandbox, it has verified nearly 1 million bank accounts and is well-positioned to take advantage of Saudi Arabia’s new Open Banking Framework, particularly its recent Payment Initiation Services.

• This framework will empower Lean to offer merchants alternative payment options to traditional cards, enhancing financial inclusion and transaction efficiency.

• General Catalyst’s Managing Director, Neeraj Arora, emphasized Lean’s potential to build a foundational fintech infrastructure in the region, a sentiment echoed by CEO Hisham Al-Falih, who highlighted the critical role of fintech in the Middle East’s economic transformation.

🔜 What’s next?

• With this new funding, Lean plans to expand its Pay-by-Bank and Open Banking offerings and strengthen partnerships across MENA.

• This growth positions Lean to further compete with regional rivals, such as Tarabut Gateway, which has also seen robust investment.

• By scaling its fintech infrastructure, Lean aims to support a diverse range of businesses in delivering secure, impactful financial services, setting the stage for broader fintech adoption in a rapidly evolving market.

🔍In other news…

1. Strada UAE is breaking new ground in real estate marketing with their YouTube documentary 'Inside Strada'.

2. Saudi investment firm ewpartners has announced a $50 million investment in Leshines, the supply chain solutions arm of Lenovo.

3. Dubai’s economy saw a 3.3% growth in Q2 2024, reaching $31.58B, with non-oil sectors like tourism and technology driving the expansion.

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