Intelmatix, a Riyadh-based artificial intelligence start-up, said on Tuesday it has closed a new funding round led by Saudi Arabia's technology venture capital fund STV.
Sultan Holdings, an investor in some of the Middle East and North Africa’s largest companies, also participated in the round.
The companies did not disclose the amount of investment.
“We are excited to partner with Intelmatix on its journey towards harnessing deep-tech for advancing the horizons of AI and reaching new frontiers of its application,” Abdulrahman Tarabzouni, STV’s founder and chief executive, said.
Saudi Vision 2030 provided the regulatory and technical enablers to support the launch of Intelmatix
Anas Alfaris,
Intelmatix co-founder and chief executive
Intelmatix, which was founded this year by a group of Massachusetts Institute of Technology graduates with a proven track record, is using AI and advanced analytics to design technology that improves operations, productivity, growth and sustainability for governments and the private sector.
The start-up is focusing on location intelligence that maps the relationships between spatial, social, economic and demographic data and makes predictions using AI and data analytics.
Location intelligence helps in taking important business decisions, such as choosing the most profitable location for a new branch, the best land in which to invest or the optimum placement of storage and operations centres for logistics companies.
It helps governments to address critical planning and management challenges such as streamlining emergency services, efficiently operating utilities or establishing a new hospital.
Location intelligence offers opportunities worth billions, analysts say.
In Saudi Arabia alone, the location intelligence industry exceeds 2 billion riyals ($533.2m) annually and is valued at more than 100bn riyals globally, Anas Alfaris, co-founder and chief executive Intelmatix, said.
“The idea of Intelmatix was not born overnight … our strategy crystallised through years of collaboration between the R&D sector and the business sector … Saudi Vision 2030 provided the regulatory and technical enablers to support the launch of Intelmatix,” he said.
Intelmatix said it aims to become a leading AI and data analytics firm in the Mena region through its operations in Riyadh, London and Boston.
“We recognise the revolution occurring today in the business world due to AI and advanced analytics … for us, Intelmatix is more than an investment, it is a key strategic step to advance the prospects of AI adoption and enablement in the business sector,” Naif Al Kabeer, chairman of Sultan Holdings, said.
Saudi Arabia is aiming to attract foreign and local investment worth $20bn in the fields of data and AI in the next 10 years. AI is expected to contribute up to 12.4 per cent of the country’s gross domestic product – equivalent to $135bn – by 2030, a report by consultancy PwC said.
In October, Saudi Arabia launched its National Strategy for Data and Artificial Intelligence, which aims to make the Arab world’s biggest economy a leader in AI while helping it to diversify the economy and reduce reliance on hydrocarbons.
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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