Via Financial Times

Five presidents and the heads of some of the world’s biggest banks and weapons makers are among those beating a path to Riyadh this week as Saudi Arabia uses its financial clout to lure heavyweights to its “Davos in the desert” conference.

A year after the kingdom’s flagship annual investor meeting was boycotted by a host of executives in the wake of the brutal murder of Jamal Khashoggi, the veteran journalist, many of those who stayed away are back. The Public Investment Fund, the powerful sovereign wealth fund that organises the event, claims the third iteration of the Future Investment Initiative, which begins on Tuesday, will be the biggest yet.

Jared Kushner, President Donald Trump’s son-in-law and adviser, is due to speak on a panel discussing what next for the US. The moderator will be Blackstone chief executive Stephen Schwarzman, one of the high-profile attendees who pulled out at the last minute last year. Other returning financiers include Larry Fink, chief executive of BlackRock, and Tidjane Thiam, chief of Credit Suisse, according to a list of speakers. Another expected guest is Tom Barrack, executive chairman of Colony Capital and an ally of Mr Trump, who was forced to apologise after suggesting it was a “mistake” to criticise Saudi Arabia over Khashoggi’s killing.

The murder of the journalist by Saudi agents in the kingdom’s consulate in Istanbul a year ago triggered Riyadh’s biggest diplomatic crisis since the 2001 attacks on the US. The CIA reportedly concluded that Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, must have authorised the operation, which Riyadh blamed on a rogue operation. Prince Mohammed denied involvement but told CBS television last month that he took “full responsibility as a leader in Saudi Arabia” as the kingdom tries to put the murder behind it.

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As the conference kicks off, the challenge for the crown prince is to turn the glitz and celebrity into inward investment as Riyadh struggles to deliver on an ambitious plan to overhaul its oil-dependent economy.

“The conference showcases the kingdom’s willingness to open up for business and demonstrate its commitment to a new phase in its economic development,” said a senior banker. “But this is a third attempt to convince investors that the government will follow through this time. It will probably be met with scepticism as the kingdom continues to disappoint in implementing its stated targets, from boosting the private sector to selling off state assets in a timely manner.”

Foreign direct investment into the kingdom has been at years-long lows and the economy is close to its second recession in three years, with the IMF this month slashing its 2019 growth forecast from 1.9 per cent to just 0.2 per cent. And attacks on the heart of the Saudi oil industry last month underlined the country’s geopolitical risks, causing ratings agency Fitch to downgrade the kingdom’s credit rating.

Still, the prospect of fee-generating deals meant the bankers never really left, even after Khashoggi’s killing.

Supporters of Jamal Khashoggi during a protest outside the Saudi consulate in Istanbul last year days before authorities said he was killed. The journalist’s murder prompted several executives to boycott the PIF forum
Supporters of Jamal Khashoggi during a protest outside the Saudi consulate in Istanbul last year days before authorities said he was killed. The journalist’s murder prompted several executives to boycott the PIF forum © AFP

Financiers have continued to work on the delayed listing of Saudi Aramco, the state oil company, with dozens of banks hired for a deal that could reap them hundreds of millions of dollars in fees. Saudi-owned television reported on Tuesday that Aramco would launch its initial public offering on November 3. The IPO was pulled last week at the last minute after international investors questioned the valuation of up to $2tn coveted by Prince Mohammed.

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In addition, the PIF, the vehicle for the crown prince to drive his economic reforms, is overseeing a raft of megaprojects across the kingdom, while also snapping up assets overseas.

Karen Young, a Gulf expert at the American Enterprise Institute, said: “From a relationship perspective, there is a number of banks and boutique firms that have their own incentives to be in the kingdom. The [Saudi Aramco] IPO is one but there are a whole number of other deals, potential privatisations [and] restructurings that could be years of work and fees.”

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The bankers will be joined by an array of politicians, such as Jair Bolsonaro, Brazil’s president, and India’s prime minister Narendra Modi. The PIF is expected to announce investment funds for both countries, one person briefed on the matter said. They will be joined by the presidents of Nigeria, Kenya, Congo-Brazzaville and Niger.

Steven Mnuchin, US Treasury secretary, and Rick Perry, the energy secretary, are among the American attendees, who account for about 40 per cent of the speakers, double the number of Europeans and Asians. David Cameron, former UK prime minister, is also set to attend, along with Ernie Els, the South African golfer, and Terry Virts Jr, a former Nasa astronaut who will debate the future of space exploration.

But there are also some notable absentees, including Dara Khosrowshahi, chief executive of Uber who was among the first to pull out last year despite the PIF splashing out $3.3bn for a stake in the car-hailing app in 2016. The chief executives of several big banks, including Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley, are also not expected to attend. Instead, other senior executives will represent these institutions that have bagged top roles on the Saudi Aramco IPO.

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