Abu Dhabi, UAEWednesday 19 June 2019

Saudi officials to meet Goldman Sachs, Citigroup, JPMorgan during US tour, Finance Minister says

The delegation will visit companies in industries including entertainment, technology and banking

Saudi finance minister Mohammed Al Jadaan says senior Saudi officials touring the US will visit investment banks. Fayez Nureldine / AFP
Saudi finance minister Mohammed Al Jadaan says senior Saudi officials touring the US will visit investment banks. Fayez Nureldine / AFP

Senior Saudi officials touring the US to drum up business will visit investment banks including JPMorgan Chase, Morgan Stanley, Goldman Sachs, Citigroup and Bank of America, Saudi Finance Minister Mohammed Al Jadaan said.

“There are opportunities being created for a lot of US businesses," Mr Al Jadaan said in an interview with Bloomberg Television in Washington, the first stop in Saudi Crown Prince Mohammed bin Salman’s three-week tour of America. The Saudi delegation is also expected to visit Boston, New York, Seattle, San Francisco, Los Angeles and Houston on a trip scheduled to last through April 7.

Prince Mohammed received a warm welcome by President Donald Trump on Tuesday. A day earlier, Saudi Foreign Minister Adel Al Jubeir told reporters in Washington that relations with the US are “at an all-time high.”

The Saudi delegation will visit American companies in several industries including entertainment, technology and banking, Mr Al Jadaan said. Saudi officials are already in talks for investments in US infrastructure and technology, he added.


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Besides business deals, the kingdom is also planning a dollar-denominated bond sale in the next few weeks, Mr Al Jadaan said, adding that the size of the sale has yet to be determined.

The kingdom has "almost hired" banks for the offering and is considering 5-year, 7-year, 10-year, 12-year and 30-year bonds or longer, he said. The government is looking at other currency options but sticking to dollar-denominated securities for now, he added.

Saudi Arabia has selected banks including JP Morgan Chase and HSBC to help arrange the sale, people familiar with the matter told Bloomberg earlier, as the kingdom seeks to plug its budget deficit.

Goldman Sachs Group, Morgan Stanley and Citigroup will also manage the offering that may happen as soon as this month, the people said, asking not to be identified because the information is not public.

The world’s biggest oil exporter plans to borrow the equivalent of $31bn this year to bridge an expected budget deficit of $52bn and fund growth plans after its economy shrank last year. Last week, the kingdom said it is increasing a $10bn syndicated loan by $6bn after existing lenders and new banks showed “an exceptional response”.

Mr Al Jadaan dismissed suggestions that the government’s fiscal overhaul -- put into motion during the oil price rout -- have become less urgent now that crude prices are higher. Officials have introduced measures over the past two years including new taxes and hikes to domestic energy prices as they try to bolster non-oil government revenue.

“Fiscal reforms are not oil price connected," Mr Al Jadaan said. "We implemented energy price reform again at the beginning of this year despite the fact that oil prices have increased, so we are determined and committed to go on."

Despite complaints from the private sector, the government doesn’t plan to revise a new "expat fee" that was imposed in January on Saudi businesses that employ foreign workers, he said.

“There are no plans to revise any of the reforms that we have implemented," he said. "These have been modeled for an extended period of time. We knew what the impact is going to be."

Saudi Arabia is still considering New York, Hong Kong and London for part of its initial public offering of shares in energy company Saudi Aramco, Mr Al Jadaan said.

“We are assessing still international markets - New York, London, Hong Kong - and obviously the anchor market is Saudi Arabia, so no decision has been made,” he said.

“The Aramco IPO is one important part of a large reform that is taking place in Saudi Arabia,” he added, alluding to Prince Mohammed’s economic programme to transform and diversify Saudi Arabia, dubbed Vision 2030.

Saudi Arabia’s energy minister said last week that the IPO could be delayed until 2019.

The Wall Street Journal reported on Monday that Saudi Arabia was scaling back its plans to sell shares in the state-owned entity formally known as Saudi Arabian Oil Company, choosing to list only on the domestic stock exchange next year to give the government more time to determine whether to also use an international venue. The story cited unidentified government officials and others close to the process.

The expected IPO is of keen interest to business leaders meeting with the crown prince.

Saudi officials hope they will raise as much as $100 billion by selling up to 5 percent of the company, valuing Aramco at $2 trillion. Yet, many observers have questioned that valuation, suggesting a realistic figure is nearer $1tn.

Prior to the crown prince’s visit to the US, Aramco executives and government officials pitched their plan for what could be world’s largest share sale to some of the biggest US mutual fund firms and hedge funds, people familiar with the discussions said earlier this month.

At informal dinners and meetings in New York, Houston and Washington, investors pushed back at several aspects of the deal, the people said, asking not to be identified discussing private meetings. Among the issues raised were the $2tn valuation Saudi Arabia wants for the world’s largest oil producer, the scale of dividends Aramco’s prepared to pay and the impact of the shale boom on oil prices over the next few years.

Updated: March 25, 2018 02:13 PM