The Saudi-US CEO Forum will see the cream of the two nations’ business leaders, industrialists and financiers gather in Riyadh
Fink, chairman and CEO of BlackRock.
The first foreign visit by a new president is a big draw, but what the American business leaders are really interested in is what has been called the “Saudi sale of the century” — the program of privatizations and initial public offerings that has been valued at $300 billion, including its centerpiece, the potential $100 billion privatization of Saudi Aramco.
In that respect, one big question was still officially unanswered: would the New York Stock Exchange (NYSE) — considered a possible venue for part of the biggest initial public offering (IPO) in history — be represented at the business forum?
A request to NYSE for confirmation of its attendance in Riyadh went unanswered. When the British Prime Minister Theresa May recently visited the Kingdom, Xavier Rolet, the CEO of the London Stock Exchange, accompanied her.
But Reuters reported this month that a NYSE delegation will visit Saudi Arabia in late May to try to lure a listing by Aramco. And representatives of the Nasdaq will be attending today’s event in Riyadh, according to organizers.
US industrial groups also have Aramco in their sights for deals, with oil-services companies like Schlumberger, Halliburton and McDermott all tipped to be about to announce new contracts with the Saudi oil giant.
The other big item on the business agenda is the prospect of multibillion-dollar defense contracts as Trump’s America “resets” its relationship with Saudi Arabia and other Gulf nations in the face of Daesh terrorism and a perceived increased threat from Iran.
The value of any such deal — for fighter aircraft, command systems, ships, air missile defense and maritime security — has been estimated at as much as $300 billion over 10 years by some media outlets citing Washington sources, much higher than any previous US defense deal with Saudi Arabia.
Edward Burton, president and CEO of the US-Saudi Business Council, said: “I would never underestimate the purchasing power of Saudi Arabia in defense. They are prolific procurers of defense equipment and one of the top-five spenders in the world. It reflects what is going on in the neighborhood.”
Oil and energy is also likely to figure prominently on the agenda. There could be some tough talking on the price of oil and the ability of the US shale industry to keep increasing its global market share even at prices in the low region of $50 per barrel. Efforts by the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, to limit global oil output and increase prices have been complicated by US exports of shale oil and — to a lesser extent — gas.
Saudi Arabia does, however, remain the second-biggest source of oil imports to the US (after Canada), providing 1.124 million barrels per day out of a total import schedule of just over 8 million barrels, according to figures from the US Energy Information Administration.
Even without the big ticket-items of Aramco, defense and oil deals, there is a wealth of business opportunities on the table for American business leaders in Riyadh.
Burton said: “The Kingdom has made clear its commitment to a long-term strategy of restructuring the economy.
“I am sure (the Saudis) will be drawing attention to the opportunities in economic development projects, in public private partnerships, and in the big program of privatization and IPOs, with as many as 100 companies for sale or public listing.
“At the same time, US business is aware of the need for diversification and localization of the workforce. The companies attending will be committed to working with the Kingdom toward a system of locally sourced vendor-supplier agreements that places a high emphasis on outsourcing to Saudi Arabia small and medium enterprises,” Burton added.
The Wall Street financiers attending the forum will be looking for clarity and commitment to the economic diversification strategy of Vision 2030, with all the transactional opportunities that presents.
One New York banker attending the forum said: “Many of us have been encouraged to commit capital to Saudi Arabia and put resources on the ground there. It is a whole new mindset, for us and for them. This will be an opportunity to get to know their potential local partners and calibrate whether (the diversification strategy) is real and is happening.”
But the forum is by no means a one-way street. Just as important for the Saudi-US business relationship are the opportunities for investment by Saudi Arabia into the US. President Trump has vowed to put “America First” in terms of manufacturing and employment, and is keen to welcome Saudi investment.
At a recent meeting between the US president and Mohammed bin Salman, Saudi Arabia’s deputy crown prince, a package of investment in American infrastructure and other initiatives was discussed. Consultants have proposed investments in states in the US Midwest that have suffered heavily through job losses and industrial change, and which backed the president in last year’s election.
Burton said: “Saudis have already proved to be prolific investors into the US, in portfolio investment and in equity. Companies like SABIC and Aramco have made big commitments to the US, and Prince Alwaleed bin Talal is the biggest individual investor from Saudi Arabia, with hotel and equity investments like Twitter.
“Saudis are also big investors in US real estate in Florida, California and New York. They are no strangers to the financial attraction of America, even before President Trump.”
One of the big issues in recent US-Gulf relations — the strains in aviation policy between the two regions over the “open skies” dispute and the cabin laptop ban imposed by the Americans on travelers from some Middle Eastern states — is unlikely to assume a high profile at the forum.
The three Gulf airlines affected by the “open skies” row — Emirates, Etihad and Qatar Airways — are not participating. Saudi Arabian Airlines (Saudia) was not affected at all by the row over alleged anti-competitive practices by the Gulf airlines, and only to a lesser degree by the laptop ban.