Cross Border Capital Markets Report: Middle East Investors and USA Investments in 2020

This report examines investments made by Middle Eastern investors into USA companies throughout 2020. Many deals in the region are unannounced so this data may under-represent actual deal volume and size. This report outlines the type, deal count, dollar volume, and industries of deals conducted by Middle Eastern investors into USA companies. Mubadala Capital Ventures is highlighted, and a recent Series G round conducted by Taulia is analyzed.

Middle Eastern Capital Market Overview: USA Companies

In 2020, 200 cross-border deals were announced between Middle East-based investors and USA-based companies for a total of $85 billion deployed. The charts below show volume and completion in this cross-border category. This data excludes the acquisition of SABIA by Saudi Aramco for approximately $69 billion

FIGURE 1: Investment Made by MENA Investors in USA Companies

• Deal count ranged between 15 and 75 per quarter.
• The private equity, venture capital, and corporate buyers proportion of deal flow remained consistent by quarter.
• Venture capital investors completed the most deals, accounting for approximately 80% of all deals announced in the region.
• Deal count peaked in Q3, largely driven by a more active private equity and IPO market.
• The largest deployment of capital occurred in Q2 of 2020, which amounts to 47% of annual spending.
• The acquisition of SABIA by Saudi Aramco for $69 billion was the largest cross-border transaction. The deal is not included in the charts above.

Middle East Investors and USA Investments: Investments by Industry

Middle Eastern investors continuously seek diversification from their predominantly oil-driven markets, as well as utilization of cutting-edge technologies in their domestic economies. Technology investments in the USA have given these investors access to diversification not readily available in their domestic capital markets. For this reason, J&A expects deal count and volume to steadily rise between Middle East-based investors and USA-based companies. J&A reviewed all deals by industry to determine which technologies were being exposed to the Middle Eastern markets through these investments.

FIGURE 2: Capital Breakdown

• Middle Eastern investors invested in the mobility industry more than any other industry. A total of $6.72 billion was deployed in 10 deals with a median deal size of $502.5 million. The deals included investments in a $2.16 billion second public offering conducted by Xpeng, which was a participant in the Qatar Investment Authority, and a $700 million growth-equity round conducted by REEF Technology in which Mubadala Investment Company participated.
• Autonomous cars, manufacturing, and artificial intelligence also saw large capital deployment in a relatively small number of deals. The deals included Waymo’s $3 billion Series A and IonQ’s $62 million Series C, in which Mubadala Capital’s Ventures was actively involved.
• The industry with the greatest volume of cross-border deals was TMT (technology, media, and telecommunications), although the median deal size was lower at around $20 million.

In general, Middle Eastern investors select a diverse set of industries in which to deploy capital. Investors in the MENA region often have a more flexible mandate than USA or European investors because of the less crowded fund management market in the Middle East. It is common for large Middle Eastern family offices or holding companies to be diversified into multiple industries and verticals.

Investor Spotlight: Mubadala Capital’s Ventures

Mubadala Capital’s Ventures is the venture capital arm of Mubadala, a division of Mubadala Investment Company, a sovereign wealth fund based in Abu Dhabi, United Arab Emirates. Mubadala Investment Company has over $232 billion in assets under management. The venture capital platform is globally focused, with offices in San Francisco, California, London, the United Kingdom, and Abu Dhabi, United Arab Emirates.

FIGURE 3: Mubadala Capital’s Ventures

Investment by Industry in 2016 – 2021 (announced deals)

• Mubadala Capital’s Ventures completed 24 deals in 2020 and increased assets under management to $1,287 billion.
• Mubadala Capital’s Ventures has an industry focus on healthcare, logistics, and software.
• The firm’s median capital invested in 2020 was $70 million, a marginal increase from their five-year average of $66 million.

Deal Spotlight: Taulia

The Company

Taulia is a USA-based financial technology firm and developer of an SaaS financial supply chain platform intended to help companies strengthen supplier relationships. The company’s platform helps businesses turn invoices into revenue opportunities, lower the barriers for e-invoicing participation, and allow suppliers access to self-service and management tools.

Most Recent Financing Status

• Taulia raised $60 million based on a pre-money valuation at $340 million of Series G venture funding in a deal on July 9, 2020.
• The deal was led by Ping An Insurance Company and Zouk Capital, Harmonic Growth Partners, and Prosperity7 Ventures. J.P. Morgan also participated in the round.
• Prosperity7 Ventures is a subsidiary of Saudi Aramco and is based in Dhahran, Saudi Arabia. The firm has participated in three investment rounds in 2020 with an average deal size of $91 million.
• The funds will be used to accelerate growth, as the company sets its sights on further global expansion.
• Payment software services were the most active vertical with USA-based companies, raising a total of $12.82 billion from Middle Eastern investors in 2020.

The 200 deals and $85 billion of capital deployed by Middle Eastern investors in USA companies showcase the importance of cross-border deals in the region. USA companies provide Middle Eastern investors with access to leading technology deals and bring new innovations to the region. USA companies should be mindful of the opportunities provided by cross-border capital markets, particularly with the Middle East.

Cross Border Capital Markets Report: USA Investors and Middle Eastern Investments in 2020

This report investigates the investments made by USA investors into Middle Eastern companies throughout 2020. Only announced deals are analyzed. This report will outline the type, volume, and industries of these deals.

USA Capital Market Overview: Middle Eastern Companies

In 2020, 118 cross-border deals were announced between USA-based investors and Middle Eastern-based companies in which a total of $5.2 billion was deployed. This report lays out the volume, industries, and number of deals completed in this cross-border category.

FIGURE 1: Investments Over Time

• Deal count remained consistent in 2020 but capital rose substantially in Q1 and Q3 due to large strategic acquisitions.
• Venture capital firms conducted the largest volume of deals and account for 84% of the total count in 2020.
• Strategic acquisitions made up 8% of the deal count but contributed 98% of capital deployed.
• Two large acquisitions contributed towards the majority of capital raised. These were the acquisition of Careem by Uber in Q1 and the acquisition of Peak Entertainment Software by Zynga in Q3.
• A total of 10 strategic acquisitions were conducted with a median of $1.03 billion with large deals in oil and gas companies and mobile technology.
• Private equity groups were not particularly active in these cross-border deals, and conducted a total of five deals.

2020 Cross Border Investments by Industry: USA Investors and Middle Eastern Investments

USA-based venture capital and private equity groups invest in a wide range of Middle Eastern companies with a particular focus on cutting-edge technology and innovative companies. Strategic acquisitions are industry-specific and designed to grant large corporations in the USA access to Middle Eastern markets.

FIGURE 2: Capital Breakdown

• Several deals span industries, such as the acquisition of Careem by Uber for $3 billion, which is categorized as application software, automotive, and platform software.
• Application software was the most active industry for cross-border investments by USA investors in 2020 in both deal count and capital raised. A total of 25 deals were conducted and a total of $3.13 billion was raised in the sector.
• Business productivity software and financial software industries saw a high deal count, particularly with venture capital firms. A total of 20 deals were conducted in each sector with a median deal size of $1.45 million in financial software and $0.84 million in business productivity software.

Investor Spotlight: NGP Capital

NGP Capital, formally known as Nokia Growth Partners, is a subsidiary of Nokia. The firm specializes in providing growth capital to technology businesses and has made more than 90 investments since its inception in 2005. NGP Capital is active in the USA, Europe, and Asia and has conducted deals with companies such as Deliveroo, Xiaomi, Moovit, and UCWeb.

Figure 3: NGP Capital
Investment by Industry in 2012 – 2020 (announced deals)

• NGP Capital completed 20 deals in 2020 and increased assets under management to $1.2 billion.
• NGP Capital has an industry focus on digital health, intelligent enterprise, and smart mobility sectors.
• The firm’s median capital invested in 2020 was $25 million, a marginal increase from their five-year average of $24.6 million.

Deal Spotlight: Fetchr

The Company

Fetchr is a provider of automation and digitization solutions for shipping and logistics companies. The company is headquartered in Dubai and operates across the Middle East with offices in Abu Dhabi, Riyadh, and Cairo. Fetchr is expanding its global presence and has offices in London and Beijing.

The Technology

The company utilizes GPS tracking to provide domestic and international courier locations via its positioning, predictive, and machine learning technologies. This facilitates faster and more efficient deliveries and allows clients simpler access to domestic and international shipping.

Most Recent Financing Status

• Fetchr raised $58.4 million based on a pre-money valuation at $340 million of Series C1 venture funding in a deal on September 5, 2020.
• The round was led by CMA CGM, CEVA Logistics, and NEA.
• NGP Capital, BECO Capital, Iliad Partners, Hussein Hachem, Tamer Group, and Majid Al Futtaim also participated in the round.
• The funds will be used to accelerate growth, as the company sets its sights on further global expansion.
• NEA is an early-stage venture capital firm based in Maryland, USA. The firm has $24 billion in assets under management and has made 70 investments in the last 12 months.

The 118 deals and $5.2 billion of capital deployed by USA investors in Middle Eastern companies showcase the importance of cross-border deals in the region. Venture capital groups are active in the lower to middle market segments and focus on technology-enabled businesses. Strategic acquisitions are used to grant large USA-based firms access to the region and typically occur with mature and developed Middle Eastern companies. As the Middle East grows in population and income levels, J&A anticipates activity from USA-based investors and strategic acquirers to increase.

Cross Border Capital Markets Report: USA Investors and LATAM Companies in 2020

This report outlines the announced investments made by USA investors in Latin American companies in 2020.  Focus is placed on deal count, volume, and industry. Data may be underreported since only announced deals are analyzed. Our investor spotlight includes Valor Capital Group; our deal spotlight includes a growth equity in Nelogica for $100 million.

Latin American Market Overview: USA Companies

In 2020, 124 cross-border deals were announced from USA-based investors in 118 Latin American companies for a total of $3.51 billion. This report outlines the volume, industry, and number of deals completed in this cross-border category.

FIGURE 1: Investments Over Time

• In 2020, 118 Latin American companies received investments from USA investors. Of them, 108 are located in South America and 10 in Central America. The average deal size was $30 million.
• Of those investments, $2.53 billion, or 80%, was raised from venture capital sources, while only $640 million, or 20%, were deployed by private equity firms into Latin American deals.
• In Q3 there was a rise in the capital raised, as $800 million, or 59%, of the capital was deployed. Significant deals included Neon, a Brazilian digital banking platform, Rappi, a Colombian delivery platform, and dLocal, an online payments platform from Uruguay. Active investors in this quarter were 10X Capital from New York, 8VC from San Francisco, and Accion from Massachusetts.
• The largest deal was announced in Q2 for Global Cloud Xchange, an operator of information technology infrastructure, for a total of $400 million.
• More than 80% of the capital raised was directed into online services, digital solutions, or cloud-based product businesses.

USA Investors and LATAM Investments: Investments by Industries

USA investors deployed capital into Latin American companies operating in technology markets. Active sectors included financial software, financial services, or similar companies in B2B spaces. Finance-related industries saw large capital deployments and deal counts, while most B2C industries were significantly lower.

FIGURE 2: Capital Breakdown

• Finanical software accounted for the majority of deals with over $1.3 billion raised, while the least amount of capital was invested in automotive deals, likely as a result of the pandemic and consumer spending along with the rise of new mobility solutions such as Bird, Uber, and others.
• IT consulting, telecommunications, and systems management companies had very low deal counts, yet their capital raised was consistently close to $400 million in 2020.
• Information technology companies were not negatively affected by the COVID-19 pandemic due to their ability to operate regardless of location.

Investor Spotlight: Valor Capital Group

Valor Capital Group is a venture fund headquartered in New York. It was the most active USA cross-border investor in Latin American companies. Valor conducts global investments and has a historical preference for deploying capital in USA and Brazilian companies.

Valor focuses on technology companies, with a special interest in companies in financial services. The firm participated in 12 deals in 2020. They deployed $14 million on average per deal in their 2020 financing activities.

Figure 3: Valor Capital Group Deals Overview

Deal Spotlight: Nelogica

The Company

Nelogica is a financial service company from Porto Alegre, Brazil, with Marcos Boschetti serving as its CEO. Nelogica aims to provide information to its clients to train them in auctions, assets, and other trade-related activities in simulated scenarios that take historical results and create a virtual setup for users.

The Product

Nelogica’s main product is called Profit, a platform that provides resources for analytical and operational profiles, along with customization tools to differentiate from other traders. It is divided into four product lines, but optional modules are also available.

• ProfitTraining: Provides market replays to train subscribed users by monitoring past auctions, identifying how asset movements occurred, and acting in a simulated environment so users interact with the markets in a computer-generated setting.
• ProfitOne: Platform with analytical resources, charts with regular technical analysis intervals, and the Renko chart. It compiles technical indicators and graphical study tools.
• ProfitPlus: Delivers resources for different profiles, such as day-trade, tape reading, and technical analysis features, with graphic data features.
• ProfitPro: Integrates software modules and extra functionalities. The system is designed for scalpers and day-traders. Tools offered to cover flow analysis (tape reading), price action, systematized operations, and other useful features.

Most Recent Financing Status

The last deal to date was a $100 million growth capital raised from private equity sources. The placement was completed on November 26, 2020. This has been the only round the company has made, and only two investors actively funded the firm: Crescera Capital from Brazil and Vulcan Capital from Seattle. Both investors hold a minority stake in the company.

Cross Border Capital Markets Report: LATAM Investors and USA Companies in 2020

This report outlines the announced investments made by investors from Brazil, Mexico, Panama, and other Latin American countries in USA companies, with a focus placed on deal count, volume, and industry. Only announced deals are analyzed. We reviewed Mindset Ventures and Mojo Vision as part of our investor and deal spotlight.

Latin American Market Overview: USA Companies

In 2020, 96 cross-border deals were announced between Latin American-based investors and USA-based companies for a total of $5.26 billion deployed. This report shows the volume, industry, and number of deals completed in this cross-border category.

FIGURE 1: Investments Over Time

• Deal count peaked in Q1 of 2020. Deal count was reduced significantly in Q2 as the economic effects of the COVID-19 pandemic took place, and the volume of deals steadily increased in Q3 and Q4.
• Venture capital firms accounted for the majority of transactions in the sectors with 98% of deal count and capital deployed, while only 2% came from private equity sources.
• Deal size average in the whole year was $54.79 million.
• Deal count rose in Q3 and Q4 of 2020 after pandemic effects were measured and the markets stabilized.

LATAM Investors and USA Investments: Investments by Industry

Latin American investors deployed capital into USA companies operating in markets unique and not present in Latin American countries, such as aerospace, e-commerce, and technology industries, which saw large capital deployments.

FIGURE 2: Capital Breakdown

• Artfo Holdings, from Mexico, deployed $1.90 billion into SpaceX for their later stage VC raise on August 18.
• Business and productivity software received the second-highest amount of funding, with $1.79 billion raised. The industry experienced the highest deal flow, with a total count of 38 transactions. Some of the companies that received investments are Netskope, a cloud security platform that raised $340 million; Farmers Business Network, which received $250 million; and the fintech company Tradeshift, which raised $240 million.
• Financial software and financial services companies received investments from a total of 25 Latin American capital sources, or roughly 13% of all Latin American investments in USA companies.
• In general, Middle Eastern and North African (MENA) investors select a diverse set of industries in which to deploy capital. Investors in the MENA region often have a more flexible mandate than USA or European investors because of the less crowded fund management market in the Middle East. It is common for large Middle Eastern family offices or holding companies to be diversified into multiple industries and verticals.

Investor Spotlight: Mindset Ventures

Mindset is a venture capital fund headquartered in Sao Paulo, Brazil. Mindset was the most active cross-border investor in USA companies in the LATAM region. Mindset Ventures typically invest in early-stage companies and are industry agnostic. They usually participate in seed funding and Series A deals.

Mindset focuses on IT companies and B2B-based firms, and has an appetite for companies in financial services and healthcare. The firm participates in less than 12 deals per year. They deployed over $10 million for each deal in their 2020 financing activities.

FIGURE 3: Mindset Ventures Deals Overview

Deal Spotlight: Mojo Vision

The Company

Mojo Vision is an international company that develops augmented reality products and platforms for implementation in several industries, though most of their technology and services have been used for medical devices, which was their focus in 2020.

The Product

Mojo Lens is a smart contact lens with a built-in display that can output information without interrupting the focus, all while delivering real-time data analytics without the need for external devices.

Most Recent Financing Status

The company raised $51 million of Series B1 venture funding in a deal led by New Enterprise Associates on April 29, 2020, putting the company’s pre-money valuation at $450 million. Liberty Global Ventures, Intellectus Partners, Numbase Group, WndrCo, Gradient Ventures, Horizon 3 Venture Capital, and 13 other investors also participated in the round. The funds are being used to accelerate the development of the company’s smart contact lens, the Mojo Lens.

Investment Forecasts Moving Forward

2021 will serve as a recovery year for the USA market, with all firms looking to achieve their forecasted expectations with fundraising activities. Latin American investors will continue to invest in USA companies in select technology industries that they do not have access to in domestic markets. J&A forecasts the continued investment in e-commerce and technology sectors, as their market trends have been accelerated by the effects of the COVID‑19 pandemic.