The sovereign wealth fund of OPEC Gulf producer Kuwait looks to invest in Saudi Aramco’s initial public offering, two sources familiar with the plans told Reuters on Wednesday, in another sign that Saudi Arabia is tapping friendly governments in the region to ensure the success of what would be the world’s largest listing ever.
Kuwait, via the Kuwait Investment Authority (KIA), plans to take part in the much-delayed listing of Saudi Arabia’s giant oil firm, according to Reuters’ sources.
Kuwait plans to invest US$1 billion in Aramco’s IPO, a person briefed on the Saudi push to ensure investment from regional allies told Financial Times.
Saudi Arabia will be offering 1.5 percent of the company on the Saudi stock exchange, the Tadawul, as early as in early December.
The Saudis, however, have had a bitter pill or two to swallow in the IPO process. First, the valuation of Aramco appears to be some US$300 billion lower than the coveted US$2-trillion valuation. And second, foreign fund managers have not been too keen to invest in the Saudi oil giant, even if it is the world’s most profitable oil company.
Therefore, Saudi Arabia appears to have turned now to its friends in the Gulf to ensure the success of the IPO.
Abu Dhabi, the oil-rich emirate of the United Arab Emirates (UAE), could invest up to US$1.5 billion in Aramco via one or more state-controlled entities, Bloomberg reported on Tuesday, citing people familiar with the matter.
Outside the Persian Gulf, China could invest in Aramco’s IPO, potentially boosting the ties between the world’s top oil exporter, Saudi Arabia, and the world’s top oil importer, China. Russia, however, doesn’t plan a big investment, if at all.
Norway’s US$1.1 trillion Government Pension Fund Global—the world’s biggest sovereign wealth fund—is not even thinking of pouring money into Aramco.
Last week, Malaysia’s state oil company Petronas, which Aramco was courting as a large investor, said it had decided against the investment, in another blow to the Saudi hopes for large investors underpinning the biggest IPO ever.
By Tsvetana Paraskova for Oilprice.com
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