Font Size
Share this article


Print Friendly Version
07 November 2019
INVESTMENT

China considers up to $10 billion investment in Saudi Aramco’s IPO

The Beijing-based Silk Road Fund is among the parties that have been in discussions to buy stock in the offering and some other Chinese funds are expected to join.

BLOOMBERG/SIMON DAWSON


Chinese state-owned entities are in talks about investing a combined $5 billion to $10 billion in Saudi Aramco’s initial public offering (IPO) as the Kingdom seeks commitments from friendly governments to shore up the record share sale, reported Bloomberg.

President Xi Jinping has been seeking to revive ancient trading routes under his ‘One Belt, One Road’ initiative and investing in Saudi Aramco would cement ties with Saudi Arabia as well as provide China a way to profit from rising oil prices.

State-owned oil producer Sinopec Group and China Investment Corporation have also held talks in recent months about investing in the Saudi Aramco IPO. Commitments have not been finalised, and the lineup of investors, as well as the amounts each firm puts in, will ultimately depend on the Chinese government.

The Silk Road Fund was set up in 2014 with $40 billion of initial capital, it was later supplemented with another CNY 100 billion ($14 billion) of funds.

Large commitments from China would help Saudi Aramco make the share sale a success after Western money managers pushed back earlier on the company’s valuation. Bloomberg reported that Saudi Crown Prince Mohammed Bin Salman has long insisted the state oil company is worth $2 trillion, although he’s prepared to scale back his expectations to between $1.6 trillion and $1.8 trillion.

The head of Russia’s sovereign wealth fund said last week that Saudi Aramco’s IPO is a ‘unique opportunity’. Russian investors are keen to participate in the deal, said, Kirill Dmitriev, Chief Executive Officer of the Russian Direct Investment Fund.

Partners of the Russian sovereign wealth fund are considering taking part in the deal, however, no final decision has been made and investment amounts have not been set.

Similarly, Malaysian state energy company Petronas said that Saudi Aramco has invited the oil firm to participate in the IPO, a move that could help strengthen their ties.

The approach comes as Petroliam Nasional nears the start of commercial operations at a $27 billion refinery and petrochemical project built jointly with Saudi Aramco in southern Malaysia.


RELATED STORIES: CROWN PRINCE MOHAMMED BIN SALMAN CHINA INVESTMENT CORPORATION SINOPEC GROUP ONE BELT ONE ROAD’ SAUDI ARAMCO PETRONAS RUSSIAN DIRECT INVESTMENT FUND

MOST READ


RECOMMENDED NEWS



BRANDS MAGAZINES LATEST EDITION

OUR BRANDS



CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.


Subscribe to our News Letter

Subscribe

© 2019 CPI Financial. All rights reserved.

No part of this website may be reproduced or used in any form of advertising without prior permission in writing from the editor.