24/10/2017 10:00 AST

It’s a big week for Saudi Arabia’s Crown Prince Mohammed bin Salman. For the first time since his elevation as heir to the kingdom, he will play host to a Davos-like gathering of the global investing elite. Heavyweights from SoftBank’s Masayoshi Son to U.S. Treasury Secretary Steven Mnuchin are rolling into Riyadh to see at first hand his plans to make the city a regional financial powerhouse. Hanging over the affairs will be the up-in-the-air status of the biggest deal in capital-markets history.

Since the so-called Future Investment Initiative came together a few months ago under the auspices of Saudi’s massive Public Investment Fund, questions about the viability of a planned $100 billion initial public offering of stock in Saudi Aramco, the national oil company, have intensified. Chief among them is the difficulty of reaching the $2 trillion valuation for the group that the ruling family wants, according to news stories. Last week Reuters reported that China offered to buy 5 percent of Aramco in a deal that could circumvent an IPO.

The snag with the Chinese option is that Saudi Arabia has other objectives beyond raising cash to fatten the kingdom’s finances and fund social welfare. The Aramco offering is a key step towards making Riyadh a regional, if not international, capital for capital. It is part of the crown prince’s blueprint for reducing Saudi Arabia’s reliance on oil – a feat never fully achieved by a major resource economy in the modern era.

As noted in a report by State Street Global Advisors on the eve of the FII confab, which kicks off on Tuesday, “the Saudi Aramco transaction should be leveraged in a much more significant way to change the relationship between the Saudi kingdom, the stewards of the economy, its citizens and the international investment community.”

The crown prince is banking on Riyadh’s appeal as a financial hub to meet the extraordinary ambitions of his Vision 2030 plan to move away from hydrocarbons – wise given the accelerating adoption of electric vehicles – towards other industries, including financial services. Transforming the $700 billion economy and better sharing the wealth with 33 million subjects, two-thirds of whom are under the age of 30, is of existential importance for the Saudi monarchy.

Market authorities have taken strides to make the Tadawul, the Saudi bourse, an easier place for foreigners to buy shares and even short them. As a result, Saudi stocks are being considered for inclusion in indexes widely followed by investment professionals. The FTSE Russell is mulling whether to upgrade Saudi Arabia to emerging-market status. So is MSCI, which will decide by next June whether to include Saudi shares in its MSCI Emerging Markets Index. If it does, the country’s weighting, at around 2.4 percent according to State Street, could lead to inflows of around $38 billion.

But the big numbers are those associated with privatizations, with Aramco top of the list. Speaking to Reuters, Vice Minister for Economy and Planning Mohammed al-Tuwaijri estimated there could be $200 billion forthcoming from the sale of various assets ranging from housing and water to telecommunications and even religious-tourism services.

Click here for more


Reuters

Saudi Aramco unit hosts first graduation ceremony

19/09/2018

Saudi Aramco, a world leader in integrated energy and chemicals, said one of its units, Saudi Arabian Drilling Academy (Sada) held its first graduation for a cohort of 132 students representing 34 dr

Trade Arabia

Aramco, Schneider sign agreement for 4IR solutions

17/09/2018

Saudi Aramco and Schneider Electric Saudi Arabia have signed an agreement to pursue a variety of Fourth Industrial Revolution (4IR) solutions under the Digital Transformation Program led by Saudi Ara

Trade Arabia

Aramco awards contract to build drilling islands to sustain target oil capacity

12/09/2018

Saudi Arabian Oil Company (Saudi Aramco), in its bid to produce an additional 250,000 barrels per day of Arabian Light crude oil from the Berri Oil Field to reach 500,000 barrels per day to maintain

Saudi Gazette

Ticker Price Volume
SABIC 118.60 3,051,555
QNBK 175.00 253,804
WALAA 23.70 381,943
STC 81.90 322,056
JABALOMAR 38.30 838,646
EEC 17.96 1,356,411
SACO 71.00 167,636
Ticker Price Change
FOOD 0.00 0.00 (0.00%)
Clariant and SABIC deepen ties under new partnership

19/09/2018

Switzerland’s Clariant and new anchor shareholder Saudi Basic Industries Corp. (SABIC) will merge their high-performance materials businesses and install a SABIC manager as head of the group as they

Arab News

Alizz Islamic inks pact with Takaful Oman

19/09/2018

Reinforcing its position as one of Oman's most innovative Islamic banking institutions, Alizz Islamic Bank signed a Memorandum of Understanding (MoU) with Takaful Oman, the Sultanate’s first full-fle

Times of Oman

Du inks deal with ADGM

19/09/2018

Dubai-based telecom operator du has announced a new partnership with the Abu Dhabi Global Market (ADGM) to facilitate its digital transformation agenda.

The MoU sets a formal framework for

Gulf News

Barwa Real Estate takes part in Qatar-Russia 2018 Year of Culture

19/09/2018

Barwa Real Estate Group, one of the leading real estate and investment companies in Qatar and the region, participated in the Qatar-Russia 2018 Year of Culture, where a seminar entitled “Qatar: No Li

The Peninsula

Saudi Aramco unit hosts first graduation ceremony

19/09/2018

Saudi Aramco, a world leader in integrated energy and chemicals, said one of its units, Saudi Arabian Drilling Academy (Sada) held its first graduation for a cohort of 132 students representing 34 dr

Trade Arabia