A View shows the port and the city of Jeddah, Saudi Arabia. The country is spending heavily to boost its infrastructure. Salah Malkawi / The National
A View shows the port and the city of Jeddah, Saudi Arabia. The country is spending heavily to boost its infrastructure. Salah Malkawi / The National
A View shows the port and the city of Jeddah, Saudi Arabia. The country is spending heavily to boost its infrastructure. Salah Malkawi / The National
A View shows the port and the city of Jeddah, Saudi Arabia. The country is spending heavily to boost its infrastructure. Salah Malkawi / The National

Business

Economy

Gulftainer’s subsidiary invests $50m to expand Jubail port

The expansion is expected to help increase Jubail’s GDP by more than $100m

Fareed Rahman
Fareed Rahman

September 07, 2021

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Global port operator Gulftainer’s subsidiary in Saudi Arabia said on Tuesday it invested $50 million to further expand operations at Jubail Commercial Port (JCP) and boost its handling capacity to 1.8 million TEUs (twenty foot equivalent units) in a bid to diversify local operations.

The expansion work undertaken by the Gulf Stevedoring Contracting Company (GSCCO) includes the installation of additional assets and equipment at the port, a revamp of the port's IT system and other dredging works.

The company “is proud to continue to support the transformation that Jubail Commercial Port has undergone since we first started handling operations, and we look forward to expanding further to support major exporters and importers and the greater city of Jubail”, Jason French, the managing director of GSCCO, said.

The new expansion works at the port are expected to contribute more than $100m to Jubail’s gross domestic product as trade is expected to pick up due to higher handling capacity.

Saudi Arabia is investing heavily in a number of new infrastructure projects to diversify its economy away from oil as part of the Vision 2030 programme. The country is building new passenger rail networks as well as a brand new airport for Riyadh to boost its infrastructure and attract more tourists to the kingdom.

“While this investment solves the medium-term logistic issues, GSCCO is discussing further development of the JCP, supporting the expansion of Jubail and Raz Al Khair and the transformation of the kingdom as a global hub connecting Asia, Europe and Africa,” the company said.

The Gulftainer subsidiary has been active in Saudi Arabia since 2008 and has developed the Jubail port, increasing its capacity from 50,000 TEUs to 700,000 TEUs before the recent investment.

Gulftainer is a privately owned, independent port management and logistics company based in the UAE. It also has operations in Iraq and the US in addition to the kingdom.

Saudi Arabia’s non-oil exports rose 52 per cent during the second quarter amid signs of a rebound in international trade and as the kingdom's economy continues to recover from the pandemic-induced headwinds.

The total value of exports for the three-month period to the end of June increased to 238.6 billion Saudi riyals ($63.62bn), the Saudi Press Agency said last month, citing a new report from the kingdom's General Authority for Statistics.

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At a glance

Fixtures All matches start at 9.30am, at ICC Academy, Dubai. Admission is free

Thursday UAE v Ireland; Saturday UAE v Ireland; Jan 21 UAE v Scotland; Jan 23 UAE v Scotland

UAE squad Rohan Mustafa (c), Ashfaq Ahmed, Ghulam Shabber, Rameez Shahzad, Mohammed Boota, Mohammed Usman, Adnan Mufti, Shaiman Anwar, Ahmed Raza, Imran Haider, Qadeer Ahmed, Mohammed Naveed, Amir Hayat, Zahoor Khan

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: September 07, 2021, 1:21 PM
Saudi ArabiaIraq