Public Investment Fund, Saudi Arabia's sovereign wealth fund, is partnering with Saudi Telecom Company, the kingdom’s largest mobile operator by market value, to establish an Internet of Things (IoT) company.
Based in Riyadh, the new company will contribute towards accelerating the IoT adoption in the Arab world's biggest economy, the entities said in a joint statement on Friday.
The company will create significant business opportunities, high quality jobs and improve productivity and efficiency for entities adopting IoT solutions in their operations
Yazeed Al Humied,
deputy governor and head of Mena investment, PIF
Both STC and PIF will own 50 per cent stake each in the joint venture that will offer smart solutions in sectors including industrial manufacturing, logistics, transportation and smart cities. The new company aims to make Saudi a regional technology centre for the Middle East and North Africa and become a “one-stop-shop” for IoT solutions.
This partnership will contribute to the PIF’s efforts to localise cutting-edge technology and knowledge in Saudi Arabia and further develop a digital economy, in line with the Vision 2030 objectives, Yazeed Al Humied, deputy governor and head of Mena investment at PIF, said.
The IoT technology facilitates in the exchange of data within devices and systems over the internet. IoT solutions are deployed across industries such as wearables, transportation, energy, retail, fifth-generation technology and healthcare.
“The company will create significant business opportunities, high quality jobs and improve productivity and efficiency for entities adopting IoT solutions in their operations,” Mr Al Humied said.
The PIF, which has about $480 billion in assets under management, is at the front and centre of the kingdom's Vision 2030 agenda that seeks to overhaul the country's economy and reduce its reliance on oil. The sovereign fund is also diversifying its investment portfolio to take advantage of new opportunities that have sprung as the world emerges from the pandemic-driven slowdown.
Besides providing core IoT solutions, the new company will create a technology ecosystem by providing consulting, implementation and training support as well as facilitating innovative funding models to support businesses in their adoption of IoT, the entities said in a statement.
It aims to accelerate the fourth industrial revolution through autonomous technologies, artificial intelligence, digital twin, sensors and other domain-specific advanced technologies, it added.
The IoT has already been identified in the STC ‘DARE 2.0’ strategy as one of the five strategic areas of investment, Olayan Al Wetaid, STC’s group chief executive, said.
“It is at our core and aligns with Saudi Arabia’s digital transformation initiatives, supported by PIF … together we seek to gradually progress towards becoming a regional centre for the connected digital communities in the Mena [region],” he added.
Saudi Arabia's IoT market is estimated to reach 10.8 billion Saudi riyals ($2.9bn) by 2025 with an annual growth rate of 12.8 per cent, according to Massachusetts-based researcher International Data Corporation.
IoT technology is in a breakthrough phase in Saudi Arabia, driven by smart cities and ongoing megaprojects in the country, Mohammed Azim, research analyst for IoT and telecom services at IDC Saudi Arabia, said.
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
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- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
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- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
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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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