Abu Dhabi, UAESunday 7 June 2020

Britain ‘finalising’ $2bn loan guarantee for Saudi Aramco

It comes at a time when international bourses are competing to win a slice of the oil giant's much-anticipated listing

The UK Treasury, which is run by Chancellor Philip Hammond, said it is "finalising" the credit backstop with Saudi Aramco. AFP / Daniel LEAL-OLIVAS
The UK Treasury, which is run by Chancellor Philip Hammond, said it is "finalising" the credit backstop with Saudi Aramco. AFP / Daniel LEAL-OLIVAS

Britain is set to approve a $2 billion loan guarantee for Saudi Aramco, at a time when the government is seeking to lure the oil giant’s mega float to London.

According to The Financial Times, the UK Treasury confirmed that it is “finalising” the credit line through its UK Export Finance group, having undertaken extensive due diligence.

“We will be providing Saudi Aramco with support in the form of credit guarantees to procure from the UK,” a Treasury spokesperson said. “This builds on previous support for UK exports as part of Saudi Aramco joint venture projects.”

The Treasury insisted that the transaction was not related to any attempts to persuade the world’s largest oil producer to choose London for its international listing. One official, cited by the FT, said: “It’s completely separate to that.”

However, it comes at a time when international bourses – including New York, Tokyo and London – are vying to win a slice of Saudi Aramco’s much-anticipated listing, which could be the biggest in history. The flotation is expected to fetch as much as $100 billion.


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The Saudi government plans to sell the 5 per cent Aramco stake next year and list it on the local stock exchange, Tadawul, and potentially one or more international equity markets.

Last week, US president Donald Trump called on Saudi Arabia to list the oil firm in New York.

“Would very much appreciate Saudi Arabia doing their IPO [initial public offering] of Aramco with the New York Stock Exchange,” Mr Trump tweeted. “Important to the United States.”

Saudi Crown Prince Mohammed bin Salman dismissed last month talk of a postponement or shelving of the Aramco IPO following media reports. He emphasised the value of the company could exceed $2 trillion, but declined to provide details of the IPO.

The listing is the anchor for a multi-pronged economic diversification plan that aims to wean the kingdom off oil income.

Opec’s biggest oil producer is undergoing an economic overhaul as part of Vision 2030, the brainchild of the crown prince that was revealed last year.

UKEF has provided Saudi Aramco with close to £500 million in support of UK exports through two joint venture projects in recent years, according to the FT.

“In the coming months UKEF will be running a series of exporter events to help connect British suppliers with Aramco to fully realise the mutual benefits of this support,” the UK Treasury spokesperson added.

Updated: November 9, 2017 05:01 PM



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