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Gulf sovereign wealth funds to consider investing in Saudi Aramco IPO

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Saudi Aramco’s listing is the cornerstone of Saudi Crown Prince Mohammed bin Salman’s reform programme conceived to wean the Kingdom off its reliance on oil.
WEDNESDAY 30, OCTOBER 2019

Sovereign wealth funds (SWF) in Kuwait and Bahrain said they will consider investing in the initial public offering of Saudi Aramco, while their counterpart in South Korea plans to wait for the inclusion of the oil giant in benchmark stock indexes, reported Bloomberg.

Farouk Bastaki, Kuwait Investment Authority’s Managing Director, said, “Usually we try to be diversified away from oil but it’s an investment opportunity.”

The Kuwait Investment Authority hasn’t been approached by Aramco nor its advisers and its decision to invest would depend on the size, timing and valuation of the IPO, said Bastaki.

Saudi Aramco is working toward an IPO that may raise $40 billion $60 billion and is set to be the world’s biggest. Saudi Arabia’s Capital Markets Authority is set to announce the start of the IPO process on 3 November 2019 and the shares will begin trading in Riyadh from 11 December 2019.

Khalid Al Rumaihi, the CEO of Bahrain’s Mumtalakat Holding Company, said that sovereign wealth fund’s investment will depend on the size of the offering, how the book-building process takes place and how Saudi Aramco will ensure participation from outside the region. Al Rumaihi said that the energy company has not approached it.

The Korea Investment Corporation will be ready to buy Saudi Aramco shares when they became part of emerging market benchmarks, said Heenam Choi, the Korean sovereign wealth fund CEO.

When it comes to equity investments, we are not strategy investors, but we just follow the benchmark, said Choi.

"If Saudi Aramco is floated and then it is part of benchmarks, we can buy it—Saudi Aramco is obviously a good company, their financial statement is remarkable,” added Choi.

 

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