👋 Good morning, Smashi Business Readers!

In today’s business roundup, QatarEnergy’s CEO, Saad Al-Kaabi, challenges the European Union’s proposed net-zero tax, questioning its impact on global energy markets and Qatar’s LNG exports. Meanwhile, Talabat’s highly anticipated IPO on the Dubai Financial Market faces a rocky debut, with shares dropping over 6.8%, despite raising $2 billion, marking a pivotal moment for the region’s tech sector. Lastly, Abu Dhabi’s CYVN Holdings strengthens its advanced mobility portfolio with the acquisition of McLaren Automotive, setting the stage for innovation in high-performance vehicles.

Dive into these stories shaping the MENA region’s economic landscape!

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"Are You Telling Us You Don’t Want Our LNG?" QatarEnergy CEO Questions EU Net-Zero Tax

📰 What is it about?

• QatarEnergy CEO Saad Al-Kaabi has voiced strong opposition to a proposed European Union (EU) net-zero policy that includes a 5% tax on global oil and gas revenues. This tax, part of a broader strategy to enforce emissions monitoring across supply chains, has sparked concerns about its feasibility and potential impact on energy trade.

• At the Doha Forum, Al-Kaabi directly challenged the EU, asking, “Are you telling us that you don’t want our LNG into the EU?” His comments highlight Qatar’s critical role as a leading supplier of liquefied natural gas (LNG) to Europe, particularly amid the continent’s push for energy security and transition.

• Qatar is currently expanding its LNG production capacity, aiming to reach 142 million tons annually by 2030, nearly double its current capacity. Additionally, the Golden Pass project in Texas is expected to contribute another 18 million tons per year.

💡 Why it matters?

• Impact on Energy Supply to Europe:
  Europe relies heavily on Qatar’s LNG, especially after disruptions caused by geopolitical tensions. A strained relationship over the proposed tax could jeopardize supply agreements, potentially exacerbating Europe’s energy crisis.

• Qatar’s LNG Expansion Plans:
  Qatar’s investment in expanding its LNG capacity underscores its ambitions to solidify its position as the world’s top LNG exporter. Policies like the EU’s tax proposal could hinder these plans, particularly in markets prioritizing low-carbon imports.

• Energy Policy and Trade Dynamics:
  The EU’s net-zero tax is emblematic of the challenges faced by fossil fuel-dependent nations as global markets shift toward decarbonization. Qatar’s pushback reflects the balancing act between meeting environmental targets and ensuring energy security.

• Economic Stakes:
  LNG forms a cornerstone of Qatar’s economy. The imposition of taxes and emissions monitoring requirements could impact revenues, disrupt supply chains, and strain Qatar’s relationships with its European partners.

🔜 What’s next?

• Negotiations with the EU:
  Qatar and the EU are likely to engage in discussions to reconcile their interests. While the EU is determined to enforce stricter environmental policies, Qatar’s strategic importance as a supplier could lead to compromises or phased approaches.

• Global LNG Market Shifts:
  With Europe’s increasing demand for LNG, Qatar may explore alternative markets if tensions with the EU escalate. Countries in Asia and Africa, which are less stringent on emissions, could become viable customers.

• Enhanced Monitoring and Technology:
  Qatar may invest in carbon capture and emissions monitoring technologies to align with evolving global standards while maintaining its competitive edge in the LNG market.

• Energy Policy Crossroads:
  The dispute highlights the broader challenge of transitioning to net-zero without compromising energy security. It underscores the need for dialogue between producers and consumers to ensure equitable and feasible solutions.

Markets

Talabat's Rocky Trading Debut: A Closer Look at the GCC’s Biggest Tech IPO of 2024

📰 What is it about?

• Talabat, the leading food delivery platform in the Middle East, made its highly anticipated trading debut on the Dubai Financial Market (DFM) after raising $2 billion (AED 7.5 billion) in its Initial Public Offering (IPO).

• Despite opening above its IPO price at AED 1.70, Talabat’s shares plunged 6.8%, closing at AED 1.49 on its first day. The IPO was the largest tech-sector listing in the Gulf Cooperation Council (GCC) this year, giving Talabat a market capitalization of approximately AED 37 billion.

• The IPO attracted significant investor interest, with cornerstone investments from entities like the UAE Strategic Investment Fund, Abu Dhabi Pension Fund, and Emirates International Investment Company, which collectively subscribed to AED 918 million worth of shares.

💡 Why it matters?

• Largest GCC Tech IPO in 2024:
  Talabat's IPO underscores the growing appetite for technology sector investments in the Middle East. This reflects the region's ambition to diversify its economy and foster innovation.

• Investor Confidence Amid Regional IPO Boom:
  The IPO, boosted from 15% to 20% of Talabat’s equity due to high demand, highlights the continued strong interest in GCC markets. Firms in the region raised over $12 billion through IPOs in 2024, cementing the GCC's role as a global hub for capital markets.

• Impressive Growth Metrics:
  Talabat reported $6 billion in gross merchandise volume (GMV) in 2023, a sharp rise from $4 billion in 2021. Its free cash flow surged 64% year-on-year to $226 million in the first half of 2024, showcasing robust financial health and growth potential.

• Regional Leadership in Food Delivery:
  Operating in 9 markets with 65,000 active partners, Talabat is a critical player in the MENA tech ecosystem. Its successful IPO could pave the way for other regional tech companies to go public.

🔜 What’s next?

• Investor Outlook and Stock Recovery:
  Talabat’s early share price decline may spark questions about market sentiment, but its financial strength and growth trajectory position it for a potential recovery as it builds investor confidence.

• Broader Regional Implications:
  Talabat's listing could inspire other tech firms in the region to follow suit, further invigorating the GCC’s capital markets. Already, companies like Alpha Data are exploring IPOs.

• Focus on Expansion:
  With strong cash flow and market leadership, Talabat is likely to focus on further expansion across MENA, leveraging its IPO proceeds to enhance operations and technology infrastructure.

• Tech Sector Evolution in the GCC:
  As one of the most successful homegrown tech companies, Talabat’s journey will serve as a benchmark for the region’s burgeoning tech industry, contributing to economic diversification efforts.

Abu Dhabi’s CYVN Holdings Acquires McLaren Automotive: A Milestone for High-Performance Mobility

📰 What is it about?

• CYVN Holdings, an Abu Dhabi-based advanced mobility operator, has signed a strategic agreement with Bahrain’s sovereign wealth fund, Mumtalakat, to acquire McLaren’s automotive business and a non-controlling stake in its racing division.

• The agreement was witnessed by Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister of Bahrain. This transaction aims to leverage CYVN’s advanced engineering and technology expertise to propel McLaren’s growth and redefine high-performance mobility.

💡 Why it matters?

• Empowering McLaren’s Growth:
  CYVN’s investment will enable McLaren to expand its capabilities in engineering, design, and cutting-edge technology, ensuring the company remains a global leader in high-performance vehicles.

• Strategic Alignment for Abu Dhabi and Bahrain:

  • Abu Dhabi’s Vision: This acquisition reinforces Abu Dhabi’s position as a hub for advanced mobility and innovation, aligning with CYVN’s strategy to create a globally connected smart mobility platform.

  • Bahrain’s Portfolio Optimization: For Mumtalakat, this deal is part of a broader strategy to enhance its investment portfolio and secure sustainable financial returns.

• Redefining High-Performance Mobility:
  Combining McLaren’s iconic legacy with CYVN’s advanced technology capabilities positions the partnership to lead innovation in the rapidly evolving mobility sector.

• Economic Diversification in the GCC:
  This move highlights the region’s commitment to diversifying beyond traditional energy sectors, focusing on advanced mobility and technology-driven industries.

🔜 What’s next?

• Regulatory Approvals and Closing:
  The transaction remains subject to regulatory approvals and other closing conditions. Once finalized, CYVN will assume control of McLaren’s automotive division, with Mumtalakat maintaining a strategic role.

• Advanced Mobility Innovation:
  The partnership is expected to accelerate McLaren’s capabilities in electrification, autonomous driving, and high-performance vehicle design, setting new benchmarks in the automotive industry.

• Future Collaborations:
  The agreement opens doors for future partnerships between Abu Dhabi and Bahrain in innovation-driven sectors, potentially fostering a regional ecosystem for advanced mobility.

• Market Growth for McLaren:
  With access to CYVN’s resources and expertise, McLaren is well-positioned to expand its market share and push boundaries in engineering and mobility solutions.

🔍In other news…

1. His Highness Sheikh Tahnoun bin Zayed Al Nahyan, chairman of UAE-based AI leader G42, recently met Apple CEO Tim Cook

2. Google Quantum AI has introduced Willow, a revolutionary quantum chip poised to transform computation.

3. Open AI’s new video-generation AI ‘Sora’ is here!

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