Tag Archives: Venture Capital

Saudi Investment Freeze Doesn’t Amount to Much in Canada

The decision by Saudi Arabia to halt new investments and unload assets in Canada is likely to have limited impact.

Saudi assets in Canada are confined mainly to stakes in upscale hotel operators, some small stock holdings in companies like Canadian National Railway Co., and grain facilities.

Most investments have been made by Saudi billionaire Prince Alwaleed Bin Talal through his Kingdom Holding Co., a Riyadh-based conglomerate with investments in hotels, real estate and equities. The company’s international hotel unit joined Bill Gates’s Cascade Investment and Canadian Isadore Sharp in a 2007 buyout of management company Four Seasons Hotels Inc., taking a 47.5 percent stake.

“The matter does not affect the day-to-day operations of Four Seasons,” spokeswoman Sarah Tuite said in an email. “It is business as usual as we continue to welcome guests to our hotels and resorts worldwide.”

Alwaleed’s influence in the kingdom has diminished after his arrest last year in an anti-corruption sweep by Crown Prince Mohammed bin Salman, who is seen to be sending a message to critics of his leadership with this latest reaction against Canada.

Wheat Board

G3 Global Grain Group, a joint venture between state-owned Saudi Agriculture & Livestock Investment Co. and U.S. agri-food company Bunge Ltd., bought a 50.1 percent stake in the Canadian Wheat Board for C$250 million ($192 million) in 2015. SALIC boosted its stake to 75 percent a year later. The partnership also holds an interest in a grain export terminal being built near Vancouver. On Tuesday, officials of the Winnipeg, Manitoba-based G3 said the company continues to buy and sell grain as usual. Officials didn’t immediately return requests for comment on Wednesday.

Last year, Toronto-based technology startup QD Solar Inc. received funding from a group that included Saudi’s King Abdullah University of Science and Technology and Netherlands-based venture capital firm DSM Venturing.

Saudi lender National Commercial Bank has an asset manager that held investments in 41 Canadian companies including Suncor Energy Inc., Canadian Natural Resources Ltd. and Canadian Pacific Railway Ltd. in its AlAhli North America Index Fund, according to May 2017 filings. CN Rail, at $473,500, was the largest Canadian investment of the fund’s $148.2 million portfolio.

Trading With the Kingdom

Oil made up 99 percent of Canadian imports from Saudi Arabia in 2017

Source: Statistics Canada

Two-way trade between the two countries is tiny — around 0.4 percent of Canada’s total trade in 2017. Canada exported C$1.37 billion worth of goods to Saudi Arabia last year, mostly tanks and other armored fighting vehicles and their parts, according to Statistics Canada. The country imported C$2.63 billion in goods from Saudi Arabia over that period, mostly crude imported to the Irving Oil Ltd. refinery in Saint John, New Brunswick.

Export Development Canada, the country’s trade financing agency said it has exposure of about C$2 billion to Saudi Arabia, and about 250 customers operating in the kingdom.

“Canada stands up firmly and respectfully for human rights,” Canadian Prime Minister Justin Trudeau told reporters Wednesday in Montreal, sidestepping questions on the impact of the Saudi moves. He also declined to say whether Canada would apologize for its statements about the women’s activists.

The tanks and armored vehicles are manufactured by General Dynamics Land Systems Canada, based in London, Ontario, a unit of U.S. defense giant General Dynamics Corp., under a C$15 billion contract with Saudi Arabia signed by the Canadian government in 2014.

Currency Reverses

Saudi’s move had a brief impact on the Canadian dollar, with the loonie depreciating as much as 0.5 percent to C$1.3120 per U.S. dollar after the Financial Times reported the Saudi Arabia central bank and state pension funds instructed overseas asset managers to dispose of Canadian assets starting Tuesday.

Canada’s currency later reversed those losses to trade 0.3 percent higher at 4:29 p.m. in Toronto. The S&P/TSX Composite Index closed 0.2 percent higher at 16,315.08. Yields on 10-year government bonds fell 1 basis point to 2.36 percent.

Saudi holdings of Canadian dollar reserves are between C$10 billion and C$25 billion, with the upper end of that estimate representing 10 percent of daily Canadian dollar trading volume, according to estimates from the Canadian Imperial Bank of Commerce.

Gold, Engineering

Canadian direct investors in Saudi Arabia, meanwhile, include Barrick Gold Corp., the world’s second-biggest producer, and SNC-Lavalin Group Inc., Canada’s biggest engineering and construction company.

SNC, which has been operating in the kingdom for five decades, said late Wednesday it’s not yet been able to “fully assess” the impact of the tensions with Saudi Arabia on its business. SNC had revenue of about C$993 million in the country last year, representing about 11 percent of total sales.

“If a widespread commercial embargo on Canadian commercial interests in the Kingdom of Saudi Arabia were to be implemented on a prolonged basis, there will be an impact on our future financial performance,” SNC said in a statement.

As for Barrick, the Toronto-based miner said it doesn’t expect its copper mine in Saudi Arabia to be affected by the escalating tensions with Canada.

(Updates with SNC-Lavalin comment in penultimate paragraph.)

    Read more: https://www.bloomberg.com/news/articles/2018-08-08/saudi-arabia-investment-freeze-doesn-t-amount-to-much-in-canada

    Amazon Will Buy Target This Year, Gene Munster Predicts

    Amazon.com Inc.’s shake-up of the retail landscape may not be over, according to one well-known technology analyst.

    The internet giant will acquire discounter Target Corp., Loup Venture co-founder Gene Munster wrote in a report highlighting eight predictions for the technology industry in 2018. Amazon made waves in retailing last year with its $13.7 billion purchase of upscale grocer Whole Foods Market Inc.

    “Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster wrote, noting both companies focus on mothers and families. “Getting the timing on this is difficult, but seeing the value of the combination is easy.”

    Market-share numbers suggest a deal would be approved by regulators, and Wal-Mart Stores Inc. would still have a larger share than an Amazon-Target combination, Munster said. He estimated a take-out valuation of $41 billion, or a 15 percent premium to Target’s value. Target shares rose as much as 3.7 percent Tuesday in New York, while Amazon gained 1.6 percent.

    “Investors would view this as Amazon taking over the world and that’s a good thing,” Munster said in an interview on Bloomberg Radio.

    A Target representative declined to comment on the report. Amazon didn’t immediately respond to a request for comment.

    Munster, 46, co-founded Loup Ventures, a venture capital firm focused on virtual reality and artificial intelligence, in early 2017. Before that, he’d worked for 21 years as an analyst at Piper Jaffray Cos., where he was known for his accuracy in predicting Apple Inc.’s financial potential.

    Prognosticating about Amazon’s next deal has become a common theme for analysts. In November, DA Davidson analyst Tom Forte wrote that Lululemon Athletica Inc. may be attractive to the online retailer, while Citigroup analyst Paul Lejuez recently catalogued a host of potential targets, including Abercrombie & Fitch Co., Bed Bath & Beyond Inc. and Advance Auto Parts Inc.

    Still, Amazon may not just be interested in retail deals. Last month, CFRA bank analyst Ken Leon wrote that he foresees the Internet company buying a small- or mid-sized bank in 2018.

      Read more: http://www.bloomberg.com/news/articles/2018-01-02/amazon-will-buy-target-this-year-loup-s-gene-munster-predicts