Saudi Aramco markets IPO in Dubai after approaching Kuwait fund

(Dubai) REUTERS: Saudi Aramco met investors in Dubai yesterday to market its initial public offering (IPO), after trying to secure demand from Kuwait’s sovereign wealth fund for the deal, worth up to US $ 25.6 billion, which relies heavily on local and regional buyers.

Top executives of the Saudi state-owned oil giant, including Aramco Chief Executive Amin Nasser, met officials of Kuwait’s sovereign wealth fund weeks ago, a source familiar with the matter said, confirming an earlier report yesterday in the Kuwaiti newspaper Alrai.

Meanwhile, Aramco’s management, including its finance head and advisers, met with institutional investors at an IPO roadshow in Dubai yesterday, the second outside Riyadh after the company decided to cancel all roadshows in developed markets.

The Kuwaiti newspaper said the Kuwait Investment Authority’s (KIA) decision on whether to participate in the deal would depend on a “study” of the IPO.
Aramco said in an email it did not comment on specific investor meetings.

The KIA did not immediately respond to a Reuters request for comment. In late October, KIA Managing Director Farouk Bastaki said Aramco had not approached the fund then but that KIA would look at the IPO like any other investment.

Talks have taken place with sovereign investors including the Abu Dhabi Investment Authority, Singapore’s GIC and other funds, sources have told Reuters.

Aramco has struggled to attract a major cornerstone or anchor investor for its IPO, which could be potentially the world’s biggest.

An executive at a London-based fund, who attended the roadshow in Dubai, told Reuters he was interested in the IPO but declined to provide more details.

Some investors asked Aramco about the sustainability of its dividend policy. Aramco has set a base dividend of US $ 75 billion for five years.

A second executive at an investment firm said Aramco did not say whether that base level might grow.

The meeting was led by Aramco Senior Vice President of Finance, Strategy and Development Khaled al-Dabbagh, and Yasser Mufti, the company’s Vice President of Strategy and Market Analysis, sources said.

“The only thing left for comfort is the Saudi government, it’s fiscal policy and ability to sustain the dividends,” said a fund manager. “If you’re OK with that, you’ll invest.”

Over 20 people, wearing suits, walked into the presentation area at a luxury hotel in Dubai’s financial district but hotel security restricted entry for reporters.

Another roadshow is planned in Abu Dhabi today.

“Looks like there’s a lot of interest both from retail investors and institutions.” K.V. Vijay Raghavan, Group Finance Director at Dubai-based investment firm Arenco told Reuters after attending the roadshow.

“I wish it was more like US $ 1.4 trillion to US $ 1.5 trillion but this is what it is,” he said, referring to the company’s aim to achieve a valuation of US $ 1.6-US $ 1.7 trillion.

However, he also said that looking at the investor interest, the IPO could hit the top end of the valuation range.