Saudi Arabia is looking to emulate neighbouring Abu Dhabi by using its state energy firm to raise billions of dollars from investors, as the kingdom seeks cash to counter a severe recession.
Saudi Aramco, the world’s biggest oil company, has hired Moelis & Co. to devise a strategy for selling stakes in some subsidiaries, according to people familiar with the matter. The plan includes raising around $10 billion from a stake sale in Aramco’s pipelines, said the people, who asked not to be identified because the matter is private.
Moelis and Aramco declined to comment.
Saudi Arabia has been hammered this year by coronavirus lockdowns and the slump in crude prices. The economy will contract 5.4 percent in 2020, the most since the 1980s, according to the International Monetary Fund. The budget deficit could widen to 12 percent of gross domestic product.
Oil-producing Gulf Arab economies have been forced to accelerate efforts to attract investment.
Moelis had a broader strategic role in helping Abu Dhabi National Oil Co. raise more than $15bn this year from the likes of Apollo Global Management Inc., Brookfield Asset Management Inc. and Singapore’s sovereign wealth fund. It played a part in nearly all of the major asset disposals by the state-owned energy firm.
Adnoc, which pumps almost all of the oil in the United Arab Emirates, OPEC’s third-biggest producer, has sold shares in its fuel-retail arm and leasing rights for properties and natural-gas pipelines.
‘Ken of Arabia’
Many bankers have said this is a quicker way of raising cash than Aramco’s initial public offering in December 2019, which raised almost $30bn for the kingdom but took around two years to complete.
While the Dhahran-based firm issued $8bn of bonds last month to fund the world’s biggest dividend, its executives have said they want to lower the company’s leverage following its $69bn acquisition of chemical marker Saudi Basic Industries Corp. this year. The energy firm has lined up banks including JPMorgan Chase & Co. to help with a stake sale in the pipeline business, Bloomberg News reported in April.
Aramco in August reshuffled its senior management team and created a division focused on “portfolio optimisation” to look at the company’s existing assets as it adjusts to weaker energy prices.
Moelis was among the banks that arranged Aramco’s IPO. Its founder, Ken Moelis, has extensive experience of deal-making in the region and has the nickname “Ken of Arabia.”
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