Daily Management Review

Investments In Aramco IPO Planned By Abu Dhabi, Kuwait Sovereign Funds: Reuters


According to a report published by Reuters citing sources, investment in the initial public offering (IPO) of Saudi oil giant Saudi Aramco is being planned to be made by the sovereign wealth funds of Abu Dhabi and Kuwait. Aramco is primarily depending on investment investments from Saudi Arabia and form the Gulf region to boost its revenue generation from the IPO to about $25.6 billion.
Reuters reported quoting multiple sources that an investment of at least $1 billion was being contemplated by Abu Dhabi Investment Authority (ADIA).  The report quoted sources saying that the board of the ADIA will take the final decision.
The report also named the Kuwait Investment Authority (KIA) as being one of the institutional investors looking to invest in the IPO but the report did not clarify the potential investment amount that could be made.
No comments on the issue were available from ADIA, KIA or Aramco.
Despite long standing interest and anticipation of the Aramco IPO, as of yet no cornerstone or anchor investor for its IPO has been named the Saudi state owned oil giant even as the company is aiming to raise more than $25 billion from the deal.
According to reports, discussions for participating in the IPO have been held between officials of Aramco and representatives of investors in Kuwait and Abu Dhabi, both of which have close and strong ties with Riyadh.
According to reports, a lack of interest from foreign institutional investors has prompted the company to cancel its planned marketing roadshows for its listing outside the Gulf region. Many of the foreign investors consider that the valuation of the company has been overstated and are concerned about political, governance and environment issues that can impact the business of Aramco in the near future.
According to the Sovereign Wealth Fund Institute, a combined total of about $1.3 trillion in assets is managed by ADIA and KIA. This makes the combination of the largest sovereign funds in the world.
According to the Reuters report, two of the sources believed that ADIA was considering n investment of at least $1 billion, while two other sources said that the investment could be in the range of between $1.5 billion and $2 billion.
The president of the United Arab Emirates chairs the ADIA which has estimated assets of nearly $700 billion. Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan, a close ally of Saudi Arabia’s crown prince is the deputy chairman of the fund.
Just 1.5 per cent of the total stocks of Aramvo will be put up for public sale and the company has been valued at between $1.6 trillion and $1.7 trillion which is lower than what had been proposed by Crown Prince Mohammed bin Salman three years ago at $2 trillion
The process of the IPO was initiated by Aramco on November 3. Lead manager Samba capital said that retail subscription hit 27.04 billion riyals ($7.21 billion) on Tuesday.