Financial Times reported yesterday that Amin Nasser, the CEO of the Arabian American Oil Company (ARAMCO, currently 100% owned by the Saudi government, although originally founded by four former US oil company majors), has declared that investors should feel pleased that Crown Prince Muhammed bin Salman has arrested and purged over 200 Saudi princes, government officials, and private businessmen. This is because this was strictly an anti-corruption move, and foreign investors can be assured that there will now be no corruption in the Kingdom. Really, he said this.
Now I declared in my post title that Nasser is delusional, but I doubt it. I suspect that he is a very smart guy. The question is whether he can convince any potential buyers of the upcoming possibly $2 trillion Initial Public Offering of 5% of ARAMCO stock that indeed this purge sends a good signal to them about buying ARAMCO stock. Wow, the nation will now be rid of corruption, and, no, future investor, you need have no fear of being arbitrarily arrested or having your assets seized by MbS, none whatsoever, not that you were worrying about those things previously, but now you really do not need to worry about them at all.
Of course on the very same page of the FT there was another article about how MbS’s purge has rattled world oil markets, with oil prices now sharply falling after sharply rising after he made his purge. Nobody knows what the implications are or what the heck is going on, but, hey, no problem, no need to worry, Inshallah bukra maalesh (God willing tomorrow no problem, a fave line in KSA). In any case, Nasser’s public statement will undoubtedly completely reassure everybody, and all will become extremely calm before we know it.
Oh, there is also the matter of where this IPO will happen, touted to be the largest in history. New York and London stock exchanges have actually been competing with each other to host it, but in fact in the end this may not be such a good idea and they may not be in the running for real anyway. According to the FT the Saudis are also considering Hong Kong and Tokyo, but at the end of the article it was floated what I have all along expected and predicted: that the IPO will be handled out of Riyadh’s own exchange with specially targeted sales to specially targeted individuals, with a lot of them being local big money Saudis. So maybe Nasser’s speech was not for all the foolish foreigners, but for the well-off locals: buy when we tell you to or else you can join the officially designated-to-be-corrupt 200 plus..
Barkley Rosser
Is it a coincidence, that Muhammad bin Nayef was forced to step down, increasing Mohamed bin Salman MbS power, because of infirmities from a failed al Qaeda assassination attempt?
While MbS is rumored to see his war against Shi’a fought in Syria where the US/Saudi coalition’s attempt to give Syria to terrorists was foiled by Putin.
Because the Saudis would never think to collect their ipo trillions and then, when the checks clear and the investors are woozy, nationalize Aramco again, right?
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This sounds about right. I was wondering about that Aramco IPO being offered to parties outside of Saudi. It makes sense if they keep it in house. Taking it off the government books will make KSA’s finances look better, but they’ll still have solid control and a new patronage mechanism.
I was wondering how the ipo might affect Saudi’s government cash needs including the advertised $100B plus recapitalization of the Saudi military US hardware so it can lose in Yemen………..
ilsm,
Obviously this IPO deal is very much for cash for all of the above. Just as how much oil there really is in the Rub al ‘Khali, the details of their budget are not public information.