Good morning, ladies and gentlemen. It’s shaping up to be a busy morning (and week), led by news of progress on a potential agreement between Saudi and the US on defense cooperation. Meanwhile, two big aviation events in the capital are driving the agenda here at home, while the eyes of the world wait for news of whether Iran’s president and foreign minister have survived a helicopter crash in the country’s north.

UP FIRST-

#1- We could be “days away” from a defense pact with the US, CBS News cites an unnamed US official close to the talks as saying, after Crown Prince and Prime Minister Mohammed bin Salman met with US National Security Advisor Jake Sullivan in Dhahran to review a draft of a strategic agreement, state news agency SPA reports.

The agreement is now “nearly final,” SPA says, with CBS’ source saying the Crown Prince and Sullivan made “a lot of progress” yesterday. The meeting got ink in Reuters and AP.

REFRESHER- The agreement would see Washington provide security assurances to Riyadh, along with cooperation on the development of a domestic nuclear power industry as well as on artificial intelligence and other advanced technologies.

Where do things stand with Israel? It remains unclear whether Tel Aviv will budge on accepting a two-state solution with Palestine, which the Foreign Ministry has made clear is a requirement for Saudi to agree to a normalization pact with Israel. After his meeting with the Crown Prince yesterday, Sullivan met with Israeli Prime Minister Benjamin Netanyahu in Jerusalem to underscore the “constructive” talks in Dhahran “and the potential that may be available for Israel, as well as the Palestinian people,” according to a White House readout.

Bibi not biting? “The effort appears to be a non-starter in Israel, with Netanyahu reiterating again yesterday that he would not accept a Palestinian state” and is willing to forego normalization with Saudi, the Times of Israel reports.

#2- It’s a big week for relations with Japan: Crown Prince and Prime Minister Mohamed bin Salman kicks off this morning a four-day visit to Japan. He’s accompanied by a high-profile business delegation and will be talking investment and climate tech while there. Also on the agenda: Gaming and esports. Our biggest export to Japan: Oil. And our biggest import: cars, per Aleqtisadiah

#3- King Salman will be treated at Jeddah’s Al Salam Royal Palace for inflammation in the lungs, where his treatment program will include a course of antibiotics, state news agency SPA reported overnight. The diagnosis comes after the King was admitted earlier in the day to the palace’s royal clinics for a medical checkup due to “high temperature and joint pain,” SPA reported earlier. King Salman was briefly admitted to Jeddah’s King Faisal Specialist Hospital last month for a “routine checkup.” Reuters and the National have more.

HAPPENING TODAY-

Brace yourselves for a very aviation-heavy week: The Future Aviation Forum kicks off in Riyadh this morning with some 5k executives from aviation majors including Boeing, Airbus, China’s Comac, and Embraer gathering to chew over the industry’s trends and challenges, while signing some agreements on the sidelines.

The event is co-hosted with the International Civil Aviation Organization’s Facilitation 2024 Global Summit, which gets underway tomorrow.

AND- Riyadh will host the annual conference of the Airports Council International — also known as WAGA — from tomorrow through Thursday, 23 May. The global gathering brings together senior executives from around the world. The event’s speakers include PIF-owned airline Riyadh Air CEO Rony Douglas, Saudi Air Connectivity Program Majid Khan, Riyadh Airports CEO Ayman Aboabah and others.

MEANWHILE- The Real Estate Supply Chain Forum opens its doors today, bringing together local and international players to discuss cooperation, investment, and innovation solutions for the industry. The event, which is organized by the National Housing Company, runs until tomorrow at the JW Marriott Riyadh.

AND- Finance Minister Mohamed Al Jadaan is leading a Saudi delegation to Beijing for meetings with Chinese officials today and tomorrow, the ministry said in a post on X yesterday. The delegation will also pitch investment in gigaprojects to a number of Chinese business players.

HAPPENING THIS WEEK-

#1- The two-day subscription period for the retail tranche of the IPO of healthcare provider Fakeeh Group starts tomorrow and ends on Wednesday. The institutional portion of the offering drew in strong demand, closing with a 119x oversubscription rate. Fakeeh Group has priced the transaction at the top of the range at SAR 57.50 per share, which would give the family business a market cap of SAR 13.3 bn at the start of trading. The pricing means Fakeeh is set to raise SAR 2.9 bn from the offering.

Background: The group is taking a 21.5% stake to the market through an offering of both new and existing shares. It plans to offer 30 mn new shares and 19.8 mn existing shares held by the Fakeeh family.

ADVISORS- Our friends at HSBC are acting as sole financial adviser. HSBC is joint bookrunner together with our friends at EFG Hermes as well as ANB Capital. Moelis is advising the selling shareholders, while AlRajhi Bank, Saudi National Bank, Arab National Bank, SAB, Alinma Bank and Bank Aljazira are serving as receiving banks.

DATA POINT-

Tadawul-listed healthcare providers saw their collective net income grow 16.4% y-o-y to SAR 1.1 bn in 1Q 2024, according to data Mubasher compiled on nine listed medical groups. Meanwhile, their revenues were up 17.8% to SAR 7.3 bn.

In the lead: Dr Sulaiman Al Habib Medical Services accounted for the lion’s share of medical firms’ net income in the first quarter of the year, with its net income up 12.6% y-o-y SAR 552 mn. Mouwasat came in second, with SAR 171.6 mn in net income, rising 3% y-o-y. Other healthcare operators reporting positive results include Dallah Healthcare, the National Medical Care, Saudi German Health and others.

Out of nine listed healthcare firms, only two saw net income dip during the quarter, including Al Hammadi Holding, which saw its net income decline 21.3% y-o-ySAR 64 mn, while Ayyan Investment saw its net losses widen to SAR 56 mn.

WATCH THIS SPACE-

#1- Ukraine is looking to attract Saudi investment as it looks to recover from war and grow its economy: DTEK — Ukraine’s largest privately-held energy company — is engaged in “high-level governmental talks” with the Public Investment Fund (PIF) on the possibility of the fund putting capital into the war-torn country’s economy, CEO Maxim Timchenko told Arab News. The company is in talks “with PIF and other [Saudi] institutions” about investment in cleantech, IT, agriculture, and energy, according to Timchenko. DTEK is also involved in talks with renewables giant Acwa Power to boost its wind and solar power capacities in addition to upping battery storage activity.

BACKGROUND- Ukraine’s fintech scene is also looking for Saudi investment: Ukraine’s deputy digital transformation minister, Oleksandr Bornyakov, said earlier this month that Ukrainian fintech companies are looking to do business in Saudi. “Ukrainian companies are looking towards bolstering cooperation with Saudi and creating an enabling environment for cross-border partnership and knowledge exchange to help facilitate entry into Gulf markets,” he said.

PSAs-

#1- We’re less than a month away from Eid Al Adha: Tadawul will be closed for Eid Al Adha holiday from Friday, 14 June until Saturday, 22 June, according to a statement yesterday. Trading will resume on the stock market on Sunday, 23 June.

#2- Saudis traveling to Montenegro on charter flights will be exempt from visa requirements until Thursday, 31 October 2024, the Saudi embassy in Albania said on X. Tourists will be required to provide receipts of travel arrangement fees, along with a letter of invitation from the tourist office in Montenegro, and a return ticket to the Kingdom.

#3- Pilgrims holding a valid Hajj permit will be the only ones allowed to perform Umrah starting Friday, 24 May until Wednesday, 26 June, which overlaps with the year’s Hajj season, the Hajj and Umrah Ministry said in a directive, according to Saudi Gazette. Violators — whether citizens, residents and visitors — risk a fine of SAR 10k, with deportation and an entry ban imposed on residents in Makkah and holy sites without a hajj permit, according to a ministry post on X.

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THE BIG STORY ABROAD-

One story has captured the attention of the foreign press this morning: Search and rescue operations are underway to find Iranian President Ibrahim Raisi and Foreign Minister Hossein Amirabdollahian after their helicopter crashed in the country’s northwest. Their lives are “at risk,” according to Iran’s state news agency, Irna.

The search is being slowed by poor weather, a contributing factor in the crash. The two were returning from a visit to the border with Azerbaijan, where they inaugurated a dam, media reports suggest.

Business as usual? Iranian Supreme Leader Ayatollah Ali Khamenei says there will be “no disruption to state affairs,” Reuters reports.

The story is everywhere: (CNBC | Financial Times | Bloomberg | AP | Reuters)

Saudi Arabia is following the crash “with great concern” and has offered to help with search and rescue operations, according to a statement by the Foreign Ministry on X.

OTHER STORIES on which you’ll want to keep any eye as the week unfolds:

  • We could see a verdict as early as this week in Donald Trump’s hush-money trial in New York;
  • Boeing will send two astronauts to the space station tomorrow in the first crew test of its Starliner capsule;
  • G7 finance ministers and central bankers will meet on Thursday in Italy to chew over the state of the global economy.

CIRCLE YOUR CALENDAR-

Demo day for the final round of the Sanabil 500 MENA seed accelerator will kick off this Wednesday, 29 May in Riyadh with seven finalists. Applications for the next batch are now open and will close on 6 August 2024.

Riyadh will host a Global AI Summit from 10-12 September, state news agency SPA reported yesterday. The event, which is organized by the Saudi Authority for Data and Artificial Intelligence, will focus on key AI topics and trends, delving into its local and global adoptions, ethics, and infrastructure.

Dammam will host the Saudi Maritime and Logistics Congress from Wednesday, 18 September to Thursday, 19 September. The two-day event looks to gather up to 10k attendees and 200 exhibitors, and will discuss topics including interlinked logistics, developments in supply chains, digitalisation, decarbonisation, the energy transition, and workforce development.

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