Saudi Aramco-SABIC merger will raise strategy concerns

2019 ◽  
Keyword(s):  
Natural Gas ◽  
Public Investment ◽  
Balance Sheet ◽  
Oil Prices ◽  
Investment Fund ◽  
Content Type ◽  
The Public ◽  
Saudi Aramco ◽  
International Profile ◽  
A Share

Significance This will be used to meet part of the costs of acquiring a controlling stake in Saudi Basic Industries Corporation (SABIC), the kingdom’s principal petrochemical producer. Aramco is also looking to expand its oil marketing business and invest heavily in natural gas. Impacts The deal, and trading and gas plans, will raise Aramco’s international profile, increasing its valuation if a share offering proceeds. There is a risk that the SABIC acquisition could impair both companies’ performance and create tensions among technocrats. The proceeds of the sale will boost the Public Investment Fund (PIF) coffers. The extra debt on Aramco’s balance sheet may become burdensome if oil prices fall.

Saudi Aramco signals fresh momentum behind IPO plans

2019 ◽  
Keyword(s):  
Fossil Fuels ◽  
Public Investment ◽  
Investment Fund ◽  
Minority Shareholders ◽  
Content Type ◽  
The Public ◽  
Original Plan ◽  
Dominant State ◽  
Market Capitalisation

Significance Reports last month that Aramco had selected Lazard for a contract to work as adviser on the IPO breathed new life into a deal that has been marking time since mid-2018. Prospective investors have also been encouraged by Aramco’s recent announcement of interim results, marking a further development in public disclosure following the successful 12-billion-dollar bond issue in April. The original plan was to offer a 5% stake to generate 100 billion dollars for the Public Investment Fund (PIF), based on a 2-trillion-dollar valuation. Impacts The new advisory team may recommend modifying the planned IPO terms, especially given Aramco’s acquisition of 70% of SABIC. The IPO will give Aramco an opportunity to elaborate further its long-term strategy to adapt to the global shift away from fossil fuels. A listing of Aramco’s shares would boost Saudi market capitalisation and attract additional investment inflows. The interests of new minority shareholders and the dominant state shareholder could diverge, including over dividend policy.

Successful Aramco sale may squeeze Saudi finances

2019 ◽  
Keyword(s):  
Initial Public Offering ◽  
Public Investment ◽  
Investment Fund ◽  
Economic Diversification ◽  
Content Type ◽  
The Public ◽  
Price Range ◽  
High Valuation ◽  
Crown Prince ◽  
Public Offering

Significance The initial public offering (IPO) of a 1.5% stake in Saudi Aramco on December 6 reached the top end of the recommended price range, giving the company a relatively high valuation of 1.7 trillion dollars and netting a record 25.6 billion dollars for the Public Investment Fund (PIF) -- a vindication for Crown Prince Mohammed bin Salman. The shares were sold mainly to Saudi and regional investors. Impacts The PIF will deploy sale proceeds as part of a drive for economic diversification, both domestically and in acquiring global assets. Aramco’s commitment to generous dividends could pose problems if oil prices weaken. PIF spending of the domestic sale proceeds will lead to a foreign exchange outflow, either directly or through new imports.

Investors will greet Saudi IPOs -- and look to Aramco

2021 ◽  
Keyword(s):  
Stock Market ◽  
Capital Market ◽  
Energy Demand ◽  
Public Investment ◽  
Oil Prices ◽  
Investment Fund ◽  
Global Energy ◽  
Content Type ◽  
Regional Projects ◽  
The Capital Market

Significance Investor appetite for Saudi equities has been demonstrated in the huge over-subscription in the IPO of 20% of an internet affiliate of Saudi Telecom Company, which raised almost USD1bn. The Capital Market Authority has also approved Almunajem Foods Company’s request to sell 18 million shares, representing 30% of its capital. Impacts The proceeds of the recent stock market flotations will be used to invest in new domestic and regional projects and acquisitions. The increasingly dominant Public Investment Fund (PIF) would be able to boost its finances through a fresh sale of Aramco shares. Despite the benefits of higher oil prices, there remains a risk that the current surge will damage global energy demand.

Tesla puts spotlight on Saudi diversification strategy

2018 ◽  
Keyword(s):  
Initial Public Offering ◽  
Public Investment ◽  
Investment Fund ◽  
Private Company ◽  
Diversification Strategy ◽  
Sovereign Wealth Fund ◽  
Content Type ◽  
Saudi Aramco ◽  
New Strategy ◽  
Public Offering

Subject Tesla and the Saudi sovereign wealth fund. Significance Reports that Saudi Arabia’s Public Investment Fund (PIF) has pledged to support a shift by Tesla from a publicly listed stock to a private company fuelled speculation over the fate of the leading US electric car maker, and raised questions about the new strategy of the Saudi sovereign wealth fund. The subsequent reports of PIF interest in investing in one of Tesla’s US rivals, Lucid, has added to the intrigue. Impacts Promoting electric vehicles is consistent with Saudi Arabia’s diversification strategy, which also includes a major solar investment. PIF seeks to fund its global acquisitions by selling its stake in the kingdom’s main petrochemical producer SABIC to Saudi Aramco. This would complicate plans for an initial public offering of shares in Saudi Aramco.

Riyadh will liquidate assets faster than Gulf peers

2017 ◽  
Keyword(s):  
Public Investment ◽  
Oil Prices ◽  
Investment Fund ◽  
Sovereign Wealth Funds ◽  
Content Type ◽  
International Partnerships ◽  
Asset Classes ◽  
The Impact ◽  
Asset Managers

Subject Prospects for Gulf Arab sovereign wealth funds. Significance Lower oil prices since 2014 have hit Gulf Cooperation Council (GCC) sovereign wealth funds (SWFs) to different degrees. The impact in Saudi Arabia has been especially marked. All the funds, however, face the challenge of retaining or increasing the returns and liquidity of their assets and professionalising their management. Impacts Gulf SWFs will witness a long-term decline in importance relative to non-commodity SWFs in Asia. Saudi Arabia’s Public Investment Fund (PIF) could buck the trend of increasingly professionalised management. Diversification into new asset classes will open new opportunities for international partnerships. Foreign asset managers pitching for business in the Gulf will have to present higher-quality proposals as SWFs become more selective.

What influences bank lending in Saudi Arabia?

2020 ◽  
Vol 27 (2) ◽  
pp. 125-155
Author(s):  
Ken Miyajima
Keyword(s):  
Saudi Arabia ◽  
Private Sector ◽  
Balance Sheet ◽  
Oil Prices ◽  
Bank Lending ◽  
Policy Implications ◽  
Content Type ◽  
Balance Sheets ◽  
Level Data ◽  
Bank Balance Sheets

PurposeDeterminants of credit growth in Saudi Arabia are investigated.Design/methodology/approachA panel approach is applied to macroeconomic and bank-level data spanning 2000 ‐15.FindingsBank lending is supported by strong bank balance sheet conditions (high capital ratio, and growth of NPL provisioning and deposits), and higher growth of both oil prices and non-oil private sector GDP. Lower bank concentration also helps, likely through greater competition, so does stronger institution. Consistent with the literature, lending by Islamic banks may be more responsive to economic activity. Lending remained robust in 2015 despite oil prices having declined, helped by strong bank balance sheets and as banks reduced their holdings of “excess liquidity”. To support bank lending in the period ahead, bank balance sheets need to remain strong. Fiscal adjustment and a reduced reliance on banks to finance the budget deficit would support credit provision to the private sector.Originality/valueThe paper is first to analyze in detail determinants of bank lending in Saudi Arabia applying a panel approach to bank level data, and draws critical policy implications.

Battle to stop Ecuador re-election reform intensifies

2015 ◽  
Keyword(s):  
Oil Prices ◽  
Public Institutions ◽  
Constitutional Reform ◽  
Political Decision ◽  
Content Type ◽  
The Public ◽  
Political Situation ◽  
Election Reform ◽  
The Government ◽  
Political Decision Making

Subject The outlook for constitutional reform and presidential re-election. Significance Since the government announced its intention to revise the constitution to allow President Rafael Correa to seek re-election in 2017, the opposition has resisted the move. Various parties and coalitions have attempted to call a referendum on the issue using mechanisms in the 2008 constitution to enable greater public participation in political decision-making. The government has used its influence over public institutions to block a referendum, fearing defeat at the polls. The outcome of the conflict remains unclear six months on from when the proposal was first announced. Impacts The fragmentation of the opposition will bolster government attempts to rebuff demands for a referendum. Denying the public the opportunity to vote on constitutional reform will undermine the legitimacy of the president and government. The economic fallout from low oil prices will complicate the government's political situation and allow for opposition gains.

Greek GDP will plunge despite latest stimulus package

2020 ◽  
Keyword(s):  
Economic Policy ◽  
Budget Deficit ◽  
Public Investment ◽  
Military Spending ◽  
Arms Race ◽  
Content Type ◽  
The Public ◽  
Defence Expenditure ◽  
National Defence ◽  
Stimulus Package

Significance The speech set out the government’s economic policy guidelines for the remainder of 2020 and 2021, largely extending the package of fiscal measures in place since April 2020. Mitsotakis also announced the start of a new investment cycle in national defence, in response to rapidly deteriorating relations with Turkey. Impacts The latest stimulus package will widen the 2020 primary budget deficit to about 3.5% of GDP. The announced increase in military spending is fuelling fears among the public of an arms race with Turkey. The rise in defence expenditure will divert public investment into economically unproductive ends.

Equatorial Guinea’s VP will consolidate his position

2020 ◽  
Keyword(s):  
Economic Crisis ◽  
Oil Prices ◽  
Vice President ◽  
Medium Term ◽  
Content Type ◽  
The Public ◽  
Public Criticism

Significance Despite the public criticism, Obama Asue was soon reappointed. This was due largely to the reported intervention of the president’s son, Vice-President Teodorin Obiang, a controversial figure who is increasingly positioning himself to take over from his father. Impacts Teodorin is more likely to succeed his father after the 2023 elections, unless his father is incapacitated before then. A Teodorin presidency will increase Equatorial Guinea's dependency on China given his poor relations with Western governments. Low oil prices and COVID-19-related disruption could see the country’s economic crisis extend into the medium term.

Mexico's auto industry enjoys strong momentum

2015 ◽  
Keyword(s):  
Natural Gas ◽  
Oil Prices ◽  
Economic Reforms ◽  
The Other ◽  
Electricity Prices ◽  
Short Term ◽  
Content Type ◽  
Competitive Edge ◽  
Labour Costs ◽  
Negative Shock

Significance Further investments are to follow. Ford is expected to announce on April 17 that it will invest 2.5 billion dollars to build engines and transmissions, with about half the amount invested in northern Chihuahua, the other half in Guanajuato. Impacts Booming auto production and exports should partly compensate for the negative shock from falling oil prices. Recent economic reforms should also enhance competitiveness, notably as natural gas and electricity prices fall towards world levels. Labour costs have not risen significantly in recent years, but greater wage demands by automotive unions cannot be discarded. Recent peso depreciation should add at least a short-term boost to Mexico's competitive edge in dollars.

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