Cit­i­group says Saudi Ara­bia is best emerg­ing mar­ket for deals

The Pak Banker - - COMPANIES/BOSS -

Saudi Ara­bia's planned pri­va­ti­za­tions, in­clud­ing a share sale in the world's big­gest oil com­pany, rep­re­sent the big­gest in­vest­ment bank­ing op­por­tu­nity in emerg­ing mar­kets, ac­cord­ing to Cit­i­group Inc.

Im­ple­men­ta­tion of the king­dom's plans to re­struc­ture the econ­omy -- known as Vi­sion 2030 -- "could trans­late into a fan­tas­tic wal­let for the in­vest­ment banks," Omar Iqti­dar, Cit­i­group's head of in­vest­ment bank­ing in the Mid­dle East, said in an in­ter­view in Dubai. "We are see­ing mo­men­tum pick­ing up, with skep­tics in­creas­ingly con­verted into be­liev­ers of the re­struc­tur­ing," he said.

Deputy Crown Prince Mo­hammed bin Sal­man is over­see­ing an un­prece­dented shakeup of the big­gest Arab econ­omy as the coun­try seeks to re­duce its re­liance on oil af­ter a plunge in prices that started in 2014. The coun­try plans an initial pub­lic of­fer­ing of Saudi Ara­bian Oil Co., which the prince said may value the com­pany at more than $2 tril­lion.

The Aramco share sale is part of the prince's strat­egy to cre­ate a sov­er­eign wealth fund that will even­tu­ally con­trol more than $2 tril­lion and boost in­come from in­vest­ments. The coun­try is also seek­ing to po­ten­tially breakup its sta­te­owned util­ity Saudi Elec­tric­ity Co. into four in­de­pen­dent power gen­er­at­ing com­pa­nies. Global in­vest­ment banks are jostling for roles ad­vis­ing the gov­ern­ment on ev­ery­thing from sov­er­eign loans to IPOs. JPMor­gan Chase & Co. and Michael Klein, the for­mer Cit­i­group in­vest­ment banker who runs his own bou­tique, have been se­lected to ad­vise on state-owned Saudi Aramco's IPO, peo­ple fa­mil­iar with the mat­ter said in April. Saudi Ara­bia's stock ex­change, the big­gest in the Mid­dle East and Africa, has hired HSBC Saudi Ara­bia Ltd. as a fi­nan­cial ad­viser for its initial pub­lic of­fer­ing, sched­uled for 2018.

Cit­i­group last year won ap­proval to trade Saudi Ara­bian eq­ui­ties, its first bank­ing li­cense since ex­it­ing the coun­try in 2004, peo­ple with knowl­edge of the mat­ter said in Septem­ber. The bank is di­rectly in­vest­ing in com­pa­nies listed on the Saudi Stock Ex­change af­ter the stock mar­ket opened to di­rect for­eign in­vest­ment last June. The New York-based bank sold its 20 per­cent stake in the Saudi Amer­i­can Bank, now known as Samba Fi­nan­cial Group, to the state Pub­lic In­vest­ment Fund for $760 mil­lion in 2004, end­ing a busi­ness that it helped form in 1955. It has still won a role ad­vis­ing on some of the largest deals from the coun­try, in­clud­ing Saudi Ba­sic In­dus­tries Corp.'s ac­qui­si­tion of Gen­eral Elec­tric Co.'s plas­tics unit for $11.6 bil­lion in 2007. It was also part of Saudi Aramco's $10 bil­lion loan in 2015. Crude's more than 50 per­cent plunge since the mid­dle of 2014 is push­ing gov­ern­ments across the re­gion to dip into past sav­ings.

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