Lenovo, the world’s biggest maker of personal computers, will issue $2 billion in convertible bonds to Saudi Arabia’s sovereign wealth fund as part of a broad investment agreement that is expected to boost the kingdom’s technological ambitions.
The agreement was signed with Alat, the technology-focused arm of the Public Investment Fund, Lenovo said on Tuesday.
The deal includes the setting up of Lenovo’s Middle East and Africa head office in Riyadh, which will include a research and development centre, adding to a growing number of global companies that have set up strategic centres in the Arab world’s biggest economy.
The kingdom will also become home to a new PC and server manufacturing plant, adding to the more than 30 such factories Lenovo has globally.
The partnership will allow Lenovo to tap into “significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalising on the incredible growth momentum in the MEA region”, its chairman and chief executive Yuanqing Yang said.
The proceeds of the convertible bonds will be used to repay debt and generate working capital, Lenovo said.
They are due in three years and will be convertible to equity at maturity at an initial conversion price of 10.42 Hong Kong dollars ($1.33) a share.
The bonds are zero coupon, meaning they will not accrue interest during the tenure to maturity. Such instruments are bought by investors at a deep discount and they offer full face-value profits when they mature.
The deal comes at a time when Saudi Arabia aims to increase foreign direct investment to $100 billion annually under its Vision 2030 agenda to diversify its economy away from oil.
The kingdom hopes to have 480 global companies establish their headquarters in the kingdom by 2030 amid efforts to improve economic output.
To attract businesses, Riyadh announced its regional headquarters programme in 2021, which came into effect on January 1.
The initiative offers several business-friendly benefits to companies, including a 30-year tax break, which includes a zero per cent rate for corporate tax and a withholding tax related to the “approved regional headquarters activities”.
It also provides companies with access to loan programmes, energy and utility enablement, employment support, export credit lines, land solutions and financial incentives for research and development, among others.
The initiative will also give companies access to government contracts as the kingdom moves ahead with several developments and initiatives to advance its economic and industrial strategies.
To date, the regional headquarters programme has licensed more than 200 companies, spanning sectors from technology to energy, and consultancy to food and beverage, according to the kingdom's Ministry of Investment.
Alat was launched in February and seeks to make the kingdom a global centre for sustainable technology manufacturing.
The company has seven business units focused on domestic and international markets. These cover advanced industries, semiconductors, smart appliances, health, devices, buildings and next generation infrastructure.
It will manufacture products across more than 30 categories, including robotic systems, communication systems, advanced computers and digital entertainment, as well as advanced heavy machinery used in construction, building and mining.
Alat is chaired by Saudi Crown Prince Mohammed bin Salman and aims to create 39,000 direct jobs in the kingdom and achieve a direct non-oil gross domestic product contribution of $9.3 billion by 2030.
Lenovo said its expansion in Saudi Arabia is expected to “enhance its global supply chain resilience and flexibility”.
The company, which has several bases in Hong Kong, Beijing and North Carolina, controlled about a quarter of the global PC market at the end of 2023, data from Statista shows.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
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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Who has lived at The Bishops Avenue?
- George Sainsbury of the supermarket dynasty, sugar magnate William Park Lyle and actress Dame Gracie Fields were residents in the 1930s when the street was only known as ‘Millionaires’ Row’.
- Then came the international super rich, including the last king of Greece, Constantine II, the Sultan of Brunei and Indian steel magnate Lakshmi Mittal who was at one point ranked the third richest person in the world.
- Turkish tycoon Halis Torprak sold his mansion for £50m in 2008 after spending just two days there. The House of Saud sold 10 properties on the road in 2013 for almost £80m.
- Other residents have included Iraqi businessman Nemir Kirdar, singer Ariana Grande, holiday camp impresario Sir Billy Butlin, businessman Asil Nadir, Paul McCartney’s former wife Heather Mills.
Hunting park to luxury living
- Land was originally the Bishop of London's hunting park, hence the name
- The road was laid out in the mid 19th Century, meandering through woodland and farmland
- Its earliest houses at the turn of the 20th Century were substantial detached properties with extensive grounds
UAE SQUAD
Goalkeepers: Ali Khaseif, Fahad Al Dhanhani, Mohammed Al Shamsi, Adel Al Hosani
Defenders: Bandar Al Ahbabi, Shaheen Abdulrahman, Walid Abbas, Mahmoud Khamis, Mohammed Barghash, Khalifa Al Hammadi, Hassan Al Mahrami, Yousef Jaber, Salem Rashid, Mohammed Al Attas, Alhassan Saleh
Midfielders: Ali Salmeen, Abdullah Ramadan, Abdullah Al Naqbi, Majed Hassan, Yahya Nader, Ahmed Barman, Abdullah Hamad, Khalfan Mubarak, Khalil Al Hammadi, Tahnoun Al Zaabi, Harib Abdallah, Mohammed Jumah, Yahya Al Ghassani
Forwards: Fabio De Lima, Caio Canedo, Ali Saleh, Ali Mabkhout, Sebastian Tagliabue, Zayed Al Ameri
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Storage: 128/256/512GB/1TB
Platform: Android 12
Main camera: quad 12MP ultra-wide f/2.2, 108MP wide f/1.8, 10MP telephoto f/4.9, 10MP telephoto 2.4; Space Zoom up to 100x, auto HDR, expert RAW
Video: 8K@24fps, 4K@60fps, full-HD@60fps, HD@30fps, super slo-mo@960fps
Front camera: 40MP f/2.2
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SIM: single nano, or nano and SIM, nano and nano, eSIM/nano and nano
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Price: Dh4,699 for 128GB, Dh5,099 for 256GB, Dh5,499 for 512GB; 1TB unavailable in the UAE
THE DETAILS
Director: Milan Jhaveri
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Rating: 2/5
The specs
Engine: 3.0-litre 6-cyl turbo
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Transmission: 8-speed auto
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Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
The Gentlemen
Director: Guy Ritchie
Stars: Colin Farrell, Hugh Grant
Three out of five stars
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
