Aramco IPO puts Saudi Arabia back in business after Jamal Khashoggi killing
What a difference a year— and massive investment banking fees—can make to forget a grizzly homicide.
Last year, Wall Street and White House A-Listers largely boycotted the Saudi Kingdom’s royal conference following the murder of Jamal Khashoggi, a journalist critical of the royal family. This year, however, some of the biggest banking and political players are slated to attend the Future Investment Initiative in Riyadh, on October 29 through 31. United States Treasury Secretary Steven Mnuchin, BlackRock, Inc. CEO Larry Fink, Goldman Sachs Group investment banking partner (and former White House aide) Dina Powell, Moelis & Company Vice Chairman Eric Cantor, himself a former GOP House majority leader, and World Bank President David Malpass are all scheduled to be attending, according to people with knowledge of the matter.
Last year, the White House came under tremendous pressure for waiting to pull out of the conference until just a few days before Mnuchin was to attend. Ultimately, the White House did not send a representative to the investment conference. But this year, FOX Business can confirm Mnuchin will attend and can also confirm that the White House plans to send a senior official to attend after boycotting the event in 2018.
Why the change of heart? The outrage of the Khashoggi murder and its connection to the royal family has waned as Wall Street weighs how much money it will be making through close ties with crown prince Mohammed bin Salman as he pushes forward with a planned initial public offering, perhaps the biggest ever, of the Saudi state-owned oil and gas company, Saudi Aramco —a move designed to diversify the kingdom’s economy.
The highly-anticipated IPO was delayed for several reasons including disagreement on the company’s valuation and September drone strikes on the company’s oil factories allegedly by Iran, which halted a significant amount of oil production. But now it appears the IPO could come at the end of the year, showering at least tens of millions of dollars in fees on financiers. Trump administration officials, meanwhile, have stated they would like shares of Aramco listed on a US stock exchange.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 248.55 | +3.79 | +1.55% |
| GS | THE GOLDMAN SACHS GROUP INC. | 602.79 | +6.55 | +1.10% |
| MS | MORGAN STANLEY | 134.69 | -0.29 | -0.21% |
| BLK | BLACKROCK INC. | 1,036.73 | +9.49 | +0.92% |
And nearly every bank will be involved with the deal-- JPMorgan Chase & Co., Morgan Stanley and Goldman are top underwriters; JPMorgan is sending its head of global banking Carlos Hernandez to the conference while Morgan Stanley is sending co-head of investment banking Franck Petitgas and Goldman is sending Powell. Moelis has been retained as a financial adviser.
The Saudi’s have appraised Aramco’s valuation at $2 trillion while Bloomberg has argued the oil company is worth around $1.2 trillion.
The confab, known as the Future Investment Initiative Conference, first held in 2017 in Riyadh was dubbed the “Davos in the Desert” since it attracted many of the same power players as the World Economic Forum — including Blackstone CEO Stephen Schwarzman, tech entrepreneur Peter Thiel, and former IMF Managing Director Christine Lagarde, who recently became the first woman to head the European Central Bank.
Mohammed Bin Salman had taken over as the country’s de facto ruler just a few months before in June 2017 and it appeared bin Salman was looking to reform and modernize the Kingdom. . At the time he touted to FOX Business a $500 billion futuristic city called ‘Neom’ as an opportunity for global investors.
But in November, just a few weeks after the first conference, he placed numerous ministers and royal family members under house arrest, some were holed up in the Ritz Carlton, as part of an attempt to consolidate power. Caught up in the sweep, Saudi Arabia’s Prince Alwaleed bin Talal who counts American companies among his biggest holdings.
Amid the upheaval, Wall Street still looked at Saudi Arabia as a gold mine given its vast oil wealth and plans to use its riches to branch out into other businesses such as high tech.
But following the October 2018 murder of Khashoggi, a frequent critic of the regime and a columnist for the Washington Post, conference attendees came under enormous pressure to show some response to the bloodshed. They needed to distance themselves from the killing but still maintain close ties that would allow them to do business with the Royal Family. Ultimately, banks decided not to send CEOs or senior executives but rather less prominent officials. As did FOX Business and other global media outlets.
This year several Wall Street CEOs such as Jamie Dimon of JP Morgan, and James Gorman of Morgan Stanley will not attend, people with knowledge of the matter say, even as Fink, the CEO of BlackRock— the world’s largest asset manager—is slated to attend, according to people with knowledge of the matter.
One other likely attendee is Softbank’s Masayoshi Son. As part of the kingdom’s efforts to diversify, Saudi Arabia has invested in technology companies— putting $45 billion into Softbank’s “Vision Fund.” As Softbank picks up the broken pieces from a failed WeWork IPO, as well as a decline in the price of Uber and Slack, many expect Masa to show face in order to repair relations with the Saudis.
An outside spokesman for the Saudi sovereign wealth fund declined comment. Spokespeople for Morgan Stanley, JPMorgan, Goldman Sachs, Citibank, Softbank, Moelis & Company, Blackrock, The World Bank, and The White House all declined comment.
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