Abu Dhabi may invest up to US$1.5bil in Aramco

Listing plan: A sign of Aramco’s IPO is seen in Dhahran, Saudi Arabia. The Saudi government plans to raise more than US$25bil by selling a 1.5% stake in the company. — Reuters

DUBAI: Abu Dhabi is planning to put as much as US$1.5bil into Saudi Aramco’s initial public offering (IPO), as the oil giant taps friendly neighbours to prop up a deal that’s so far failed to draw foreign investors, people with knowledge of the matter said.

The emirate is seeking to make the investment through one or more state-linked entities, according to the people, who asked not to be identified because the information is private. Aramco representatives are meeting officials of some top Abu Dhabi funds and companies this week to discuss the potential commitments, the people said.

Bringing in a major investor from outside the kingdom would be a relief for Saudi Arabia after plans to market the IPO globally were abandoned. Aramco had high hopes of drawing in sovereign investors, including a big commitment from China, but has yet announce any firm commitments.

Aramco officials also met Kuwait’s sovereign wealth fund this month about the offering, according to other people with knowledge of the matter. The Kuwait Investment Authority (KIA) is considering a potential investment, the people said, who also asked not to be identified. KIA officials couldn’t be reached for comment.

Crown Prince Mohammed bin Salman, who’s made the record share sale a centrepiece of his plan to modernise the Saudi economy, made an official visit to Abu Dhabi yesterday, according to Saudi TV station Al-Arabiya.

The Abu Dhabi government hasn’t made a final decision on which state entities will participate in the deal, and the precise size of the investment could change, the people said. Aramco declined to comment. The Abu Dhabi government’s media office didn’t immediately respond to requests for comment.

If Abu Dhabi puts in an order of that size it would mean that the institutional offering is almost certainly fully covered. Institutional subscriptions totalled 58.4 billion riyals (US$15.6bil), lead manager for the offering Samba Capital said in a statement on Nov 21, representing about 90% of the institutional tranche.

The Saudi government plans to raise more than US$25bil, selling a 1.5% stake in the company at a valuation of between US$1.6 trillion and US$1.7 trillion. Of that, 1% is earmarked for institutional investors and the rest for Saudi retail buyers.

After international money managers balked at the valuation Crown Prince Mohammed wanted for the company, Aramco decided to lean heavily on local investors, large and small, to get the job done. They have secured commitment from some of the kingdom’s wealthiest families, many of whom had members imprisoned in Riyadh’s Ritz-Carlton hotel in 2017 during a so-called corruption crackdown. — Bloomberg

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