Investing in Emerging Markets: Middle East

If the Arab region was a single country..
“.. its 2011 GDP would have been more than $2.3 trillion, making it the world’s eighth-largest economy—bigger than India or Russia”
More than half of its population is under 25 years of age, making it one of the world’s most youthful markets

Foreign Direct Investments in the Middle East
In 2011, 928 new projects in 7.8% more than in 2010
Source: E&Y 2012 attractiveness survey, Middle East

GCC countries attract the highest FDI projects in value
•FDIreached$26.4billionin2012
•Increaseinflowshavealsobeenfacilitatedbythesignificantimprovementsmadebyindividualcountriesintheeaseofdoingbusiness:UAErankedat23accordingtoWorldBankEaseofDoingBusinessIndex

Middle East equities are too big and liquid to be ignored
The general indices of stock markets in the Arab region recorded an average growth of 23.13 per cent in 2013
The performance of GCC markets was on par with developed markets and better than emerging markets

Dow Jones Arabia Titans 50 Index (1 year): recorded an average growth of 30.2% in the last 12 months
Source: djindexes.com

Dubai Financial Market General Index (1 year)
Since the start of 2013, the Dubai stock market has registered a near 200% gain to become the best performing financial market in the world.

UAE and Qatar were upgraded to Emerging Markets status by MSCI
An estimated capital inflow of US$ 3 billion into the region a year after the upgrade
(by June 2015)
Both countries now considered by MSCI to have the same investment status as the likes of
Chinaand Brazil

The Middle East is not a story of turmoil, political conflicts and wars
One of the biggest tech IPO in the world in 2012 (& the biggest in MENA since 4 years) was in fact.. in Iraq
AsiacellCommunications, Iraqi telecom operator, raised $1.3 billion in the biggest IPO in the region since 2008
Asiacell’sIPO, doubled the stock market capitalization from $4.6bn to $9.2bn

It’s a story of growth.. beyond oil
Number of internet usersworldwidedoubled between 2007 and 2012 from 1.15 billion to around 2.4 billion
The Middle East had the 2ndbiggest increase of internet users (294%), after Africa (317%)
Today, there are more than 135 million individuals using the Internet in the Middle East & North Africa (MENA) and more than 71 millionpeopleactively using social networking technologies

High growth of mobile penetration and mobile broadband
Mobile penetration in the Arab region is around 110%
71 million mobile broadband subscriptions: 19% regional penetration
In 2013, mobile data traffic in Middle East and Africa grew 107%,Asia Pacific showed 86% growth, North America 77%, and 57% in Western Europe

Smartphones & tablets penetration in Middle East
Smartphonespenetrationintheregion:
•UAE: 62%
•KSA: 60%
•Jordan: Around 50%
•Egypt: 26%
20.9% of cellular users in KSA and UAE
own a tablet

JordanLebanonEgyptUnited Arab Emirates
With rising levels of connectivity, entrepreneurialactivity and access to inexpensive technologies, the Arab region is a hub for innovation, disruption and growth

Emerging tech trends: Digital Arabic Content & Advertising
Digital Arabic content is estimated at $18 billion in 2011, predicted to hit $28 billion in 2015
With a population of 28.3 million, Saudi Arabia ranks #1 globally in YouTube views per capita
Comparing total YouTube views, the Middle East ranks second, behind the US

In 2010, more than 75 percent of all Arabic
content was hosted by three major portals:
Maktoob, d1g and Jeeran
Today, more and more content startups are
emerging and filling this space

Yahoo!Maktoob: One acquisition boosting the tech industry
Sold to Yahoo in 2009
Raised 100M after Maktoobdeal, created 8 new companies
Jabbar& SouqGroups employ 1000 people
More than 2000 jobscreated (including Jabbar, Souq, Maktoob, MarkaVIPand others)

Rise of e-Commerce in the region
e-Commerce in the Middle East has grown from almost zero in 2008 to a $9 billion market in 2012. Projections point to strong growth to $15 billion in 2015, a 2x increase from 2011
•In 2012, over 30 million people shopped online, an increase of 65%from 2011
•100% growth in e-commerce shipments from 2012 to 2013 from cross border e-commerce in MENA
•20% shipments growth from international e-commerce
Largest markets: SaudiArabia, UAE& Egypt

Significant investments of ~$250 million since 2010
with leading companies including MarkaVIP, Namshi, and Souq
Investors in these companies have included Naspers, Rocket Internet, Summit Partners, Tiger Global Management, J.P. Morgan, and others..

Emerging e-Commerce startups
•Launched in January 2013 andis targeting a market of $5-8 billion in regional home décorand furnishing
•Net incoming orders grown by 484% from January 2013 to April 2014, despite reduced marketing spend
•Generated over $2 million of net bookings year-to-date
•Raised a total of $9.3 million since October 2012
•World’s largest Arabic online bookstore offering more than 10 million titles from 30,000 publishers in both English and Arabic
•Customers in Saudi Arabia, Jordan, Kuwait, the UAE and 65 other countriesincluding Turkey, the US, and the UK
•Raised first round of $400K after 7 months of launching, raised another $600K and now raising series A

e-Health services
The total addressable market for eVisitsin the GCC is about $2-3 billion
•SaudiArabia’sIntegratedandComprehensiveHealthProgram(ICHM),thelargeste-Healthnetworkintheworld
•Connectingmorethan3,500healthcarefacilitieswithabout70,000bedsthrough1400virtualserversunderasingleintegratedandautomatedpatientinformationsharingnetwork

•UAEMinistryofHealth(MoH),thecountry’stelecomoperatorsEtisalatanddutodevelopandimplementthecountry’swidermHealthprogram
•DubaiHealthcareAuthority’s(DHA)recentlylaunched“SmartHealthcareInitiative”inconjunctionwithSamsungDataSystems(SamsungSDS)andINDEXHoldingintroducesasuiteofnewsmarteHealthservicesforbothhealthcareprofessionalsandpatients

Ed-tech startups and MOOCs
In Egypt, Skills Academy (formerly known as eduudle) was launched in early 2013 and now has over 8.1 million users
In Saudi Arabia, Rwaq, a platform developing and disseminating local academic expertise online has already attracted tens of thousands of local users since its launch in September 2013
In Lebanon, Menaversitylaunched in November 2013, offering AMOOCs on professional and practical skills
In Jordan, QRF partnered with MIT and Harvard’s edXto form Edraak, a new MOOC platform whose objective is to educate over one million Arab youths by 2018
International MOOC providers such as Alison, Khan Academy and Courserahave also penetrated the Middle East through partnerships formed with local entities Silatech(Qatar) and Taghreedat(UAE)

Other emerging industries
E-payments & Financial services
Digital Content
B2B Enablers
Wearables
Ed-tech
Mobile Apps

Rise of Startup Financing
Earlystagefunding:

Oasis500 & Flat6labs in numbers
•27 waves of entrepreneurs; trained over 1500 entrepreneurs;
•Invested in more than 71 portfolio companies in 3 years
•Portfolio companies created more than 400 direct jobs and over 1,500 indirect job
•Invested in 57 companies; 46 in Egypt and 11 in Saudi Arabia
•Estimated number of jobs created to date: 300+ in Egypt and 50+ in Saudi Arabia
•Seed funding of $3.5M in Egypt and Saudi
•50% of companies raise another round funding upon graduation

Venturecapitalfunds
Corporate venture capital
Investmenttie-ups

.. and more funds are launching
WamdaVentures: $75M, invest $1 -$3M in tech growth-stage businesses
Rocket Internet and MTN to invest around $400M in e-commerce startups
MEVP: $50M, focused on companies in ICT and creative industries
i360 signed up to a $100M global fund of which 25 per cent is allocated to the region

Not only funding.. also large corporations are drawn to the Arab region’s fast growing market and sophisticated talent