The Saudi Research and Marketing Group (SRMG), the largest publishing business in the Middle East and Gulf region, signed an agreement with Bloomberg to acquire an exclusive licence to launch Bloomberg Arabiya, a multi-platform news network to serve a growing global appetite for Arabic-language business and financial news.
The Riyadh-listed media and the publishing house, will pay approximately 33.75 million riyals (US$9 million) for the business and financial news service license annually for ten years, it said in a statement to Saudi Stock Exchange (Tadawul) where its shares are traded.
SRMG, which also publishes Arabic and English language dailies Asharq Al Awsat, Arab News and Aleqtisadiah, plans a 24-hour television and radio network and dedicated digital platform under the “Bloomberg Al Arabiya” brand. The firm will also publish Bloomberg Businessweek magazine in Arabic and launch a new conference and live events series, it said in a separate statement.
This the second time Bloomberg, a US-headquartered financial data and news services company, has entered a regional tie up to capture the Arabic-speaking audience in the regional markets. The company had earlier partnered with the Saudi billionaire Prince Alwaleed bin Talal to produce Al-Arab, an Arabic language news channel, which was aborted in 2015. Bloomberg was supposed to provide five hours of business news per day for the news channel.
Bloomberg Al-Arabiya will be a direct competition to agencies like Reuters and Agence France Presse (AFP) and television channels like Al Arabiya and CNBC Arabia that produce business news in Arabic. It will provide viewers news and analysis on companies, markets, economies and politics shaping the Middle East, according to SRMG statement, which did not say when the new multi-platform service will commence.
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Prince Al Waleed and Bloomberg plan Arab news channel
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The Bloomberg Al-Arabiya team will be managed by SRMG with support from Bloomberg, and will draw on its financial and economic content and data as well as its 2,700 reporters and analysts globally. It will be headquartered in the Arabian Gulf region, SRMG said without specifying the location.
“We are very pleased with this promising partnership with Bloomberg. In addition to the many business opportunities this collaboration brings, we believe the partnership will greatly enhance the media landscape in our region,” Prince Bader bin Abdullah Al-Saud, chairman of SRMG said. “This is an exciting development for SRMG and a strong progression in our quest to offer the highest quality financial and business journalism from, and about the Middle East.”
“The Middle East is an important, economically diverse region and our agreement with SRMG allows us to deliver the sharpest global business and financial insights to a critical audience of business decision makers,” said Michael Bloomberg, the founder of Bloomberg.
The deal will give the regional media industry a boost and will help SRMG to expand into the international television business.
The agreement is “an integral part” of Bloomberg’s strategy of forming partnerships with leading news providers in markets that have a compelling economic growth stories and the company will continue to further expand its “localised international presence,” said Justin B. Smith, the chief executive of Bloomberg Media Group.
SRMG's share price rose 7.8 percent, almost 30 times the country's benchmark index on Thursday, according to Bloomberg. The shares climbed to Saudi riyals 75.20 from 69.78 riyals.
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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.”
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