Saudi Arabia's 2030 vision and the Aramco IPO. How to get involved ?

The Saudi Sovereign Wealth Fund will finance a new economic vision supplying many opportunities.

Saudi Arabia's declaration that it will offer shares in state-owned Saudi Aramco, the world's largest oil company, is creating the buzz. 

Speaking today at the Euromoney Saudi Arabia Conference in Riyadh, Prof. Laurent Marliere, CEO of ISFIN, explains the challenges of the mega-deal. The Aramco IPO is linked to an internal structural reform called "Vision 2030" pushed by Deputy Crown Prince Mohammed bin Salman. This ambitious project aims at reducing the dependance of the country on its crude oil resource. The Aramco IPO is the money maker to finance the project but not only.

Beyond the phenomenal IPO, it is expected that a wave of privatization - we are talking about 100+ companies - will accompany the process. The government will be offering shares in other companies as well. Although, it may take some time for the public company to disclose reams of financial information, it is an opportune time to position oneself in the project. 

The  Kingdom's plan to sell less than 5% of Aramco on the country's equity market would be listed in 2017, or 2018 at the latest.

Even a slice of only 5% in Aramco gives the IPO a projected value of more than $100 billion. 

Marliere says that the ownership of Aramco will be transferred to its sovereign wealth fund -- the Public Investment Fund, or PIF. Amounts announced are considerable and will help the local economy breathe out.  

He adds: "there is fresh wind blowing in Riyadh with a pro-active outlook rather than the reactivity that was felt just some months ago when oil prices were at higher level. Like many oil & gas countries, the blessing of crude oil made the kingdom obese. A diet is healthy and this is currently what is happening in the GCC and not just in KSA. Investors and public actors have to leave their zone of comfort and question their economic future.

Saudi Arabia, as the largest regional market, can certainly capitalize on several assets such as the second "blessing" after oil: it is home of the holy city of Mekka. The mandatory pilgrimage of one fourth of world's population generates substantial income. Tourism is definitely an area that is high on the government's agenda. Fintech, infrastructure and other retail sectors can be put further developed.

KSA could also profile itself as a real competitor to Dubai and Malaysia or other hubs to become the world's capital of the Islamic economy. It has the assets to do so. However, other markets have anticipated that vision on the global halal industry.

A real significant change of governance is seen on the daily life in conducting the economy. Saudi Arabia wants to become the land of plenty and it will require substantial local and foreign engineering, consultancy and supply to turn a vision into operation. 

ISFIN is the world’s leading advisory specializing in emerging markets, Islamic Finance and the Halal industry. ISFIN accompanies Western companies investing in the emerging markets and Muslim investors investing in the West.

Contact information:

Laurent Marliere, CEO ISFIN
Phone : +(32) 475422149
E-Mail : LM@isfin.net
Website : http://www.isfin.net