Saudis selling assets
SAUDI Arabia is planning a three-way foreign listing in London, Hong Kong, and New York for the record-smashing privatisation of its $2.5 trillion oil giant Aramco, anchored on a triad of interlocking ties with three foreign energy companies.Besides, the investment risks associated Middle East oil assets there is also the risk that the government might change int eh future and try to repossess the assets if they look profitable. Investors could be facing what happened to investors in Venezuela. The risk factors section of this offering could be very interesting reading. If the Saudis no longer want the risk what investors will be willing to assume it?
The Saudi authorities hope to entice ExxonMobil, China’s Sinopec, and potentially BP, into taking strategic stakes, offering them long-term access to upstream operations in return for cutting-edge technology or refinery deals, according to sources close to Saudi thinking.
The moves come amid a profound shake-up of the kingdom’s energy strategy, with the dismissal of veteran oil minister Ali al-Naimi over the weekend. Aramco chief Khalid al-Falih will take over, though there may not be immediate changes to Opec policy.
The Aramco sale is planned as soon as 2017 or 2018 and would in theory be five times larger than any initial public offering (IPO) in history, a huge prize for the London Stock Exchange.
Shares will be listed in Riyadh but the internal Saudi market is too small to absorb such a colossus, responsible for a ninth of global oil supply.
Prince Mohammad bin Salman, Saudi Arabia’s deputy crown prince and de facto ruler, says Aramco will sell 5pc of its equity, valuing the shares at $100bn (£70bn) to $150bn.
The vast IPO is the spearhead of his “2030 Vision” to break the country’s “addiction” to oil and diversify, using the proceeds for an investment spree covering everything from car plants to weapons production, petrochemicals, and tourism. “We will not allow our country ever to be at the mercy of commodity price volatility,” he says.