Friday 15 November 2019

Wealth funds considering backing Aramco share sale

Gathering in the Gulf: British inventor Richard Browning uses a jet pack at the Future Investment Initiative forum in Riyadh. Photo: AP
Gathering in the Gulf: British inventor Richard Browning uses a jet pack at the Future Investment Initiative forum in Riyadh. Photo: AP

Nicolas Parasie, Filipe Pacheco and Sarah Algethami

Sovereign wealth funds in Kuwait and Bahrain will consider investing in the initial public offering of Saudi Aramco, while their counterpart in South Korea plans to wait for the inclusion of the oil giant in benchmark stock indexes.

"Usually we try to be diversified away from oil but it's an investment opportunity," Kuwait Investment Authority's managing director Farouk Bastaki told reporters in Riyadh at the Future Investment Initiative conference. The Kuwait Investment Authority hasn't been approached by Aramco or its advisers and its decision to invest would depend on the size, timing and valuation of the IPO, he said.

Saudi Aramco is working toward an IPO that may raise $40bn (€36bn) to $60bn and is set to be the world's biggest.

Saudi Arabia's Capital Markets Authority will announce the start of the IPO process on Sunday and the shares will begin trading in Riyadh from December 11, Al Arabiya TV reported, without saying where it got the information.

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Bahrain Mumtalakat Holding Co's investment will depend on the size of offering, how the book-building process takes place and how Aramco will ensure participation from outside the region, CEO Khalid Al Rumaihi said at the conference. He said the energy company hasn't approached it.

The Korea Investment Corp will be ready to buy Aramco shares when they became part of emerging market benchmarks, CEO Heenam Choi said. When it comes to equity investments, "we are not strategy investors. We just follow the benchmark," Mr Choi said. "If Aramco is floated, and then it is part of benchmarks. We can buy it. Aramco is obviously a good company, their financial statement is remarkable."

Saudi Aramco earned $68bn in the first nine months of the year, cementing its position as the world's most profitable company, according to sources.

The state-owned oil producer disclosed the unaudited net figure to financial analysts working on its planned IPO, the sources said. Aramco has not published comparative numbers for the same period last year and its media office declined to comment.

Saudi Arabia is lifting the veil on the financials of its crown jewel as it hurries to conclude what may be the world's biggest share sale ever by the end of the year.

Crown Prince Mohammed Bin Salman is counting on Aramco's profit and the nation's vast oil reserves to attract investors to the IPO, which in turn will help fund his plan to overhaul the Saudi economy.

Bloomberg

Irish Independent

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