Exclusive: Alabbar is open to further investments with Saudi sovereign wealth fund

The billionaire entrepreneur says Public Investment Fund is a “great partner”

Mohamed Alabbar is open to further collaborations with Saudi Arabia's PIF. Marwan Naamani / AFP

Mohamed Alabbar, the UAE-based billionaire entrepreneur who co-invested with Saudi Arabia's sovereign wealth fund in a $1 billion online retail venture, is open to explore with it further joint investment options.

"We are partners and something might come up," Mr Alabbar told The National in an interview in Dubai on Wednesday. "They [Public Investment Fund] are the people I really like to deal with because they like to look into the future and I like people who are not scared of the future."
No deal, however, is currently on the table, he said, adding that the relationship with the kingdom's investment vehicle exists and "something might happen" but not at this stage. "They are a great partner", he noted when asked if he would consider more investments with the fund.

A group of investors led by Mr Alabbar and the Public Investment Fund (PIF) in November last year said they would each contribute $500 million to launch Noon, an e-commerce platform, to capitalise on growth opportunities in the Mena region's fast-growing online retail market.

Just weeks after co-investing in Noon the PIF bought a 50 per cent stake in Mr Alabbar's investment vehicle Adeptio – a platform through which he successfully led a group of GCC investors in buying a majority stake in Kuwait Food Company last year.

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The PIF, which controls stakes in a large portfolio of Saudi and foreign companies, is at the heart of the kingdom's economic transformation plans, with a mandate to generate higher levels of non-hydrocarbon revenues for the country.

The Saudi government plans to raise the PIF's size to $2 trillion, once it floats less than 5 per cent of the shares of Saudi Aramco, in what could be the biggest-ever IPO in the world. Following the IPO, scheduled to happen next year, the government will transfer the remaining shares in Aramco to the fund.

Mr Alabbar, whose acquisitions last year included stakes in Aramex and online Italian fashion retailer Yoox Net-A-Porter, bought a significant minority shareholding in venture capital firm MEVP in May. On Wednesday he launched a $250m fund with MEVP to target emerging technology investments in Mena and Turkey.

"Honestly, technology is something we are almost forced into," Mr Alabbar said, when asked if the sector will remain one of his key areas of focus as an investor. "Technology is the economy and without that we can't survive," he said, adding that he will have to "keep the search engine running", and look for more areas for investments as well.

Mr Alabbar, who is also the chairman of the UAE's largest publicly-traded real estate developer, Emaar Properties, said he was "cautiously optimistic" about the prospects for the UAE's property market, which has seen some headwinds in the past two years on the back of slower economic growth and lower oil prices.

He cautioned, however, against tactics by some developers to offer discounts, fee-waivers, flexible payment plans and assured yields in order to garner more sales. These are "gimmicks that I believe are not good for the market, not good for the consumer and I believe it is not good for our credibility", he said. "Someone is going to get hurt in my humble view," he said, without elaborating.

“I worry about all the games that get played in the market. I don’t approve [of] it.” he noted.

Mr Alabbar said that consolidation in the UAE's real estate sector would be healthy, but that Emaar was not on the lookout for acquisitions. "Not us… but I think the small guys, maybe should," he said. "If I'm a small operator, I think it is good."

Reem Investments and Abu Dhabi-listed Eshraq Properties are in the process of merging. The chairman, of Dubai-headquartered Union Properties, Nasser Bin Yousef, earlier this month told The National his firm was open to merger and acquisition opportunities.

Emaar, which is in the process of selling 30 per cent of its UAE real estate development business through an IPO, is on track to complete the deal before the end of this year, despite softer economic conditions and subdued trading activity in regional equity markets, Mr Alabbar said.

“I think we are okay, he said when asked if he expects any delays to the planned public float.

Emaar has no plans at present to spin-off any other of its units, he added.

"Not at this stage. When IPO business starts, it takes management time. After this [IPO] we need to go back to the desk and get going even though we are moving a lot [already]."