Russian And Chinese Investors To Tie Up To Invest In Saudi Aramco IPO

The initial public offering (IPO) by Saudi Aramco has caught the fancy of Russian and Chinese investors and a joint Russia-China investment fund and Russian banks have expressed their eagerness to participate in the IPO which is being hailed as the largest IPO ever.

Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, said Wednesday in Riyadh that a number of banks and some of the other investment groups in Russia are keen to own part of the shares of Aramco which is the largest oil exporting company of the world. The company is state owned and the Saudi Arabian government has finalized plans to offer just 5 peer cent of the total stakes of the company to the public through the IPO – touted to be the largest ever in history.

“Not only this, but we have a Russia-China investment fund, and through that Russia-China investment fund we see a major interest in the Aramco IPO from a number of leading Chinese institutions,” Dmitriev told reporters. “We see significant interest to invest in the Aramco IPO from Russia, from China, and we believe that this is very good for, once again, thinking jointly about oil.”

The historic rivalry between Russia and Saudi Arabia have been recently shunned by the two countries to forge an alliance that has been working to help increase global crude prices even as an increase in the total out put of oil and natural gas is being noted in the United States. Russia and Saudi Arabia are the two largest nations extracting and exporting oil. The alliance between the two nations engineered an agreement between most oil producing countries to reduce oil output till the end of 2018.

Dmitriev said that a major announcement can be expected to be made by Aramco soon in relation to a partnership with a Russian company in the field of liquefied natural gas.

The prospect of an announcement about an LNG project is possible to be made in Riyadh, Al-Falih said during the conference with Novak. Dmitriev said that another deal was announced earlier in the day which was related to Novomet, a Russian pump manufacturer.

Dmitriev said that a common platform that would facilitate making investments in Eurasia Drilling Co., the largest independent driller in Russia, would be planned be in the near future between the DIF and Aramco. He said that within the next three months, a deal which involves a joint $1 billion energy fund would be closed. The fund is a joint effort of RDIF and Aramco.

Saudi Arabia has been attempting to shift the dependency of its economy away from oil and the IPO of Aramco is at the core of that plan. According to Saudi government estimates, Aramco could be valued at $2 trillion at the time of the sale of its shares even though there are others who anticipate a lower valuation.

(Adapted from Bloomberg.com)

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Categories: Economy & Finance, Strategy, Uncategorized

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