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Saudi fintech platform Tamara raises $110m in biggest Series A funding in MENA

Retail|: Dubai: The ‘buy now pay later’ consumer spending trend has hit Saudi Arabia in a big way. A BNPY platform, Tamara, has raised $110 million from its Series A round, which is the largest such in the Middle East and North Africa to date. The investments were led by Checkout.com, and will see Tamara extend its reach in the other Gulf markets this year itself. Tamara, founded last year, was the first BNPL firm in the Kingdom to be enrolled in Saudi Central Bank’s Sandbox programme. It closed a $6 million seed funding round in January, also the largest such in that market. The buy now pay later schemes allow shoppers to buy small- and mid-ticket items on monthly instalments and not have to pay interest on the balance. This category is expected to grow 400 per cent and reach $680 billion in transaction volume globally by 2025. Riding the ecommerce wave The ecommerce sector in the MENA region could be valued at $49 billion by 2022. Tamara's solution is accessible via direct API integration or plugins and offers consumers new ways to pay online - either splitting balances over three payments or paying 30 days later. “The region and the world need payment solutions that are transparent and customer-oriented,” said Abdulmajeed Alsukhan, Tamara’s Co-founder and CEO. “We offer our customers an alternative to credit cards and cash-on-delivery, which enhances their shopping experience. This transaction is only the beginning of our journey, and a great sign that we are on the right track.” The $110 million raised represents a mix of debt and equity. Scripting the Tamara story are Abdulmajeed Alsukhan and partners Turki Bin Zarah and Abdulmohsen Albabtain. Image Credit: Supplied

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Electronic trading is giving more women a chance at their stock picking skills

Markets|Analysis|: A trading floor has always been akin to a bull fight with multiple beasts charging at one another for the kill. An industry which was once reserved for the gentleman and the lad opened its doors to others via phone and electronic trading. As per a study by Lu, Swan and Westerholm, women stock traders were more prone to buying when markets were falling, losing out in the short term, but resulting in significant gains in the longer-term, as they purchased when prices were low. This resulted in women returning as much as 43 per cent on individual stocks, and 21.4 per cent over a portfolio of 28 stocks. Men had more of a tendency to buy and sell assets quickly, and to trade in the opposite direction to women, resulting in overall losses. The COVID-19 situation and the subsequent change in fortunes has been instrumental in more women pursuing stock investing, thus generating a league of their own. An Indian online trading platform Zerodha saw a 41 per cent jump in the number of clients to 3.1 million from 2.2 million in February. But the number of women clients on the platform went up by 59 per cent, and many of them with a higher risk appetite and staying invested. A show of equanimity Internal research by online wealth manager Nutmeg found that in the month leading up to March 15, men on the platform were 56 per cent more likely than women to reduce risk in their portfolios during the sell-off, and almost twice as likely to withdraw their money. Ninety-five per cent of women made no adjustments to their account. Women are cautious and intuitive, and both attributes are important in the world of fund management. They bring in the much-needed calm and composure to a boiler room-like investment profession. A study by Forbes highlights top global female fund managers of 2020 who have given astronomical returns to their clients during COVID-19 by investing in genomics, fintech, electric vehicles manufacturing, solar energy and so forth. How about a clan? While there is significant difference between trading and investing, women are going beyond the dire need of financial independence to creating a clan where we can now imagine high networth women investors trading through women brokers and dealers and investing with women fund managers. Though it may be worthwhile to glorify such success, as per a Deloitte survey, in 2019, the proportion of women in leadership roles within financial services firms was 21.9 per cent, which is projected to grow to 31 percent by 2030—still way below parity. Here, some may argue that women may not be interested in finance and left to fulfill bigger roles of caregiving. But in days of extreme market volatility and uncertainty as we are experiencing now, it is beyond the shadow of a doubt that women can be put to a better use in grappling with investment and trading issues. Pooja Singh The writer is is an advisor to UAE Federal Authority on Capital Markets. She was part of Rise Up Asia cohort 2019.

GulfNews Business

400 and counting - UAE's cloud kitchen brands set piping hot growth rates

Retail|: Dubai: Want to take a rough guess on the number of cloud kitchen brands operating in the UAE, with Dubai hosting the majority of these? If you said 400 of them, give yourself a treat. And these 400 brands operate out of 80 locations, again the majority being based in Dubai. It won’t stop there as more F&B operators do away with the need to have a restaurant or smaller physical location and just rely on orders streaming in from apps or booked through their websites. The kitchens will do the rest – these days, there are even restaurant operators that have transformed themselves into full-fledged cloud – or ‘dark’ – kitchens to serve neighbourhoods. (Jumeirah Lakes Towers cluster has got a handful of them.) These serve all manner of taste buds – whether it’s Indian cuisine or Italian, there’s a cloud kitchen somewhere who can muster the ingredients and serve you fresh. “The food aggregator Deliveroo launched Deliveroo Editions, its cloud kitchen model to help restaurants reach a wider audience through the platform,” said Sandeep Ganediwalla, Senior Partner at RedSeer Consulting. “Sweetheart Kitchen is backed by Delivery Hero. “However, most of the cloud kitchens here are independent and work with food delivery aggregators.” Read More After serving Ambanis and Deepika, top Indian caterer is expanding his Dubai presence Dubai's cloud kitchen business: Getting too crowded for comfort or is there still room at the top? More signing up The interesting aspect is that more are entering this space, no doubt thinking of the appetizing double-digit growth rates it has been putting up since January 2020. There are funds that are backing up the business model to the hilt, more so as cloud kitchens spread to the other Gulf states. Sweetheart Kitchen has raised a combined $34 million as it adds more bases, while Dubai based iKcon, which launched in 2019, has to date picked up $20 million for its Series A funding. iKcon, which has Khalid Baareh as co-founder and CEO, will use this for its Saudi and other regional expansion plans. Among the brands it is associated with are Pinza, German Doner & Kebab, Wingsters, Salmontini, and Monkey Cookies. “The cloud kitchen space is an exciting industry that is poised for growth alongside the food delivery market which continues to benefit from COVID-19 tailwinds,” said Abdallah Yafi, Managing Partner at B&Y Venture Partners, which was one of the investors in iKcon. New F&B realities For a majority of F&B operators, the present and near future is about trying to recover from the body blows suffered last year. Many of them are still reliant on takeaways or catering to a limited number of dine-in patrons. “Restaurants are wary of heavy investments to increase their operations,” according to a report from RedSeer. “Kitchen-as-a-Service enables a cost-efficient method to test out new geographies and brands for the restaurants. “This serves the aspiration of restaurants that may not be able to afford the real estate and other associated costs if they follow the traditional route.” It's about real estate That’s exactly what some of the former restaurant operators are doing. They have repurposed their existing facilities, done away with space assigned for dine-ins and created bigger kitchens to serve the online food delivery market. Or they have scaled down and use independent cloud kitchen operators to serve their customers. This year could see more restaurant operators taking this route. Anyone with multiple outlets are particularly vulnerable. For them, cloud kitchens thus come as a solution. “The majority of cloud kitchen operators enable existing restaurants to get closer to the consumers,” said Ganediwalla. “But there are virtual restaurant players such as Rebel Foods, which have created consumer brands and deal directly with retail consumers. “Yet, the UAE/Gulf cloud kitchen market is at its infancy. There are multiple business models that are emerging such as no-frills KaaS (Kitchen-as-a-Service), virtual restaurants, and full-service satellite kitchens. Players such as Kitopi and Talabat have also expanded the ‘dark kitchen’ concept to grocery and created ‘dark stores’ to be closer to consumers.”

GulfNews Business

How much further will Bitcoin drop as investors face US capital gains tax?

Markets|: New York: Bitcoin declined for the seventh time in eight days, extending losses after US President Joe Biden was said to propose almost doubling the capital gains tax for the wealthy. The slide pushed Bitcoin down as much as 5.8 per cent to about $48,596 as it continued to lose momentum. JPMorgan Chase & Co. and Tallbacken Capital Advisors LLC had recently warned there was potential for further downside after the largest cryptocurrency fell back from its record high of $64,870 on April 14 and took out key technical levels. "Bitcoin has slipped below the 50-day moving average support that it held sacrosanct through this rally," said Pankaj Balani, CEO of Delta Exchange. "It looks like there is more downside here." Tax concerns may be weighing, too. US investors in the digital asset, which has advanced more than 70 per cent this year despite its recent pullback, already face a capital gains tax if they sell the cryptocurrency after holding it for more than a year. But the coin's been one of the best-performing assets in recent years - anyone who bought a year ago is sitting on a nearly 575 per cent gain. Hold off from selling? For investors who bought in April 2019, it's roughly 800 per cent. "One of the biggest things you have to worry about is that the things with the biggest gains are going to be most susceptible to selling," said Matt Maley, chief market strategist for Miller Tabak + Co. "It doesn't mean people will dump wholesale, dump 100 per cent of their positions, but you have some people who have huge money in this and, therefore, a big jump in the capital gains tax, they'll be leaving a lot of money on the table." The IRS has stepped up enforcement of tax collection on crypto sales. The agency - which began asking crypto users to disclose transactions on their 2019 individual tax returns - asks taxpayers whether they "received, sold, sent, exchanged or otherwise acquired any financial interest in any digital currency."

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These days there are no rock-solid guarantees on cyber security

Analysis|Technology|: Internet security blog posts are usually more at home on the inside pages of IT trade periodicals than on the front pages of international newspapers. Yet the one written by Microsoft’s Vice=President Tom Burt was a notable exception. It wasn’t long before the phones of helpdesks worldwide started to ring and IT managers’ social media feeds lit up. It revealed that a new threat had emerged targeting Microsoft Exchange Server software. This time, hackers had attempted to penetrate much deeper into the computer systems of their intended victims to lurk undetected for longs period of time. It may have compromised as many as 20,000 organisations. Large-scale attacks of this kind are becoming more common and their impact is increasingly visible to investors. They are also more quantifiable. Longer road to recovery To illustrate what is at stake here, one 2019 study examined the average revenue growth of companies affected by severe security breaches in the two years after they had occurred. Then it compared those results to industry peers not affected by cybercrime. (The research covered some 432 companies over a six-year period and assessed 460 unique events.) It found that in the two years after a severe security breach, corporate revenues first declined by about 10 per cent on average and then recovered slowly. After two years, revenues had only managed to recover to the same level they were at when the breach happened. By contrast, the revenues of companies that did not suffer a security breach increased by almost 20 percent over the same period. Read More Online security in UAE: Beware, cybercriminals are on the prowl Huawei first tech company in cyber response team of Islamic countries' grouping Stock's hit The impact of a major breach is not just reflected in earnings, but also in the share price. Indeed, corporations that have suffered a severe security breach could see their share drop by 10 per cent or more over six months and remain depressed. With such potentially enduring consequences, it is no surprise companies are stepping up efforts to protect their data. That task has become so much more difficult over the last year as the pandemic has forced millions to work from home. This has increased the vulnerability of corporate data - especially from phishing attacks directed at employees. Human 'trojans' Indeed, these attacks have become so widespread that many analysts are comparing the pandemic with an emerging cyber pandemic of sorts — with us work-from home humans playing the role of trojans. A recent report from the CFA Institute Research Foundation reveals the risks faced by corporations by the growing number of cyber threats that are emerging from both nation-states as well as criminal groups. Author Joachim Klement warns that investors need to assess their potential exposure to such attacks, which are already costing the average bank – with banks being the preferred targets of cybercrime – some $18.4 million-a-year, based on 2018 data. Model estimates for the global banking system range from $97 billion to $351 billion per year in potential losses — easily capable of triggering a financial crisis of global scale. Frequent breaches While the recent Microsoft attack attracted global attention, it was the eighth time in 12 months that the company had publicly revealed an attack by so-called nation-state groups targeting critical institutions — from health organisations fighting COVID-19, to political campaigns involved in the 2020 elections. Within this unfolding global narrative, the Gulf states represent another complex and intriguing sub-plot, where geopolitical fault lines converge and where nation-state hackers have already had an impact in a region that is home to more than a third of the world’s oil. Klement points out in his excellent analysis that after the 2019 drone attacks on Saudi Aramco facilities in Abqaiq, the US response was channelled through a cyberattack on Iranian infrastructure rather than any kind of show of military force. Worth the spend Such attacks have encouraged a major push at the state level to bolster cyber defences. Saudi Arabia has launched the largest digital operations centre of its kind equipped with a cybersecurity hub to identify emerging threats. Other Gulf states are engaged in similar efforts to shore up the weak points in their figurative firewalls. The financial industry must now take a similar approach in investing to protect itself from emerging threats, which as the latest Microsoft hack highlights, are becoming more and more damaging. Inevitably there is a cost to this, and many corporations will flinch at the required outlay of capital at a time when there is a desperate need to conserve cash. But in order to prevent business disruption, information loss and revenue loss, this investment is absolutely necessary. In this, the former US State Department official Richard Clarke may have some prescient insight: “If you spend more on coffee than on IT security, you will be hacked. What’s more, you deserve to be hacked.” William Tohmé The writer is Senior Regional Head at CFA Institute, Middle East and North Africa.

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Global airline loss estimates inch closer to $50b for 2021: IATA

Aviation|: Dubai: This is turning out to be another catastrophic year for the airline industry, as countries take strict measures to combat fresh outbreaks of the COVID-19 and its variations. The ban on incoming flights from India for a limited period and uncertainties over UK’s relaunch of international flights will add to these concerns. Which is why in its latest bleak forecasts, IATA (International Air Transport Association) expects airlines to lose a whopping $47.7 billion this year – and an increase on the earlier estimate of $38 billion. “Government-imposed travel restrictions continue to dampen the strong underlying demand for international travel,” said Willie Walsh, IATA’s Director-General. “This crisis is longer and deeper than anyone could have expected - losses will be reduced from 2020, but the pain of the crisis increases. There is optimism in domestic markets, where aviation’s hallmark resilience is demonstrated by rebounds in markets without internal travel restrictions.” Globally, airlines are estimated to have lost $126.4 billion last year, and it could have been much worse had it not been for governments coming up with support measures. Health pass In recent weeks, more airlines are trialling the IATA Travel Pass, which is the COVID-19 health info that will speed up procedures for passengers with airlines and at airports. Abu Dhabi’s Etihad Airways is running it until end May on select routes to the US and Canada. But will this speed up recovery? IATA estimates that passenger traffic - measured in revenue passenger kilometres or RPKs - will recover to 43 per cent of 2019 levels over the year. While that is a 26 per cent improvement on 2020, it is far from a recovery. Domestic markets will improve faster than international travel, said IATA. Overall passenger numbers are expected to reach 2.4 billion. That is an improvement on the nearly 1.8 billion who travelled in 2020, but well below the 2019 peak of 4.5 billion. More cash burn “Despite an estimated 2.4 billion people travelling by air in 2021, airlines will burn through a further $81 billion of cash,” he added. International passenger traffic remained 86.6 per cent down on pre-crisis levels over the first two months of 2021. Vaccination progress combined with widespread testing capacity should result in international travel reaching 34 per cent of 2019 demand levels in the second-half of the year. Domestic passenger traffic is expected to perform significantly better in markets such as China, the US and even India. IATA estimates that domestic markets could recover to 96 per cent of pre-crisis 2019 levels in the second-half of 2021. That would be a 48 per cent improvement on 2020 performance. “This is driven by strong GDP growth, accumulated consumer disposable cash during lockdowns, pent-up demand, and the absence of domestic travel restrictions,” the report said. Cargo, which outperformed the passenger business throughout the crisis, will continue to grow throughout 2021. Demand for cargo is expected to grow by 13.1 per cent over 2020. Meanwhile, total cargo volumes will reach 63.1 million tonnes this year - nearly at the pre-crisis peak of 63.5 million tonnes which occurred in 2018.