Saudis Seek $12B Loan From Banks Amid Aramco IPO Delays

The sovereign wealth fund of Saudi Arabia is set to pick a number of international banks to lend it as much as US$12 billion, after the listing of oil giant Aramco has been delayed several times, and possibly even called off, the Financial Times reported on Thursday, quoting bankers, advisors, and other people with knowledge of the process.

As many as 16 banks may be involved in what could be the first loan to the Public Investment Fund (PIF)—the sovereign wealth fund of Saudi Arabia, as the Kingdom is possibly trying to fill the gap that the delays in the listing of Aramco has created for Riyadh’s ambitions to rake in huge proceeds from the IPO to invest in diversification of its economy and mega infrastructure projects.

According to some of FT’s sources, PIF may pick the lead banks for the loan as early as today. Initially, the fund had targeted to raise around US$8 billion, but the loan could easily reach US$12 billion, a banker involved in the process told FT.  

On Wednesday, reports emerged that Saudi Arabia had called off its highly anticipated, US$100-billion IPO, Reuters sources confirmed, with even plans to list the state-run oil company on its domestic bourse, Tadawul, being scrapped. The listing was expected to be the world’s largest IPO, and the Saudis pegged a large part of the Vision 2030 economic agenda on proceeds from the IPO.

Saudi Arabia immediately denied the reports that the listing was canceled, with Energy Minister Khalid al-Falih saying in a statement carried by the Saudi Press Agency:

“The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum. This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition which the Company will pursue in the next few months, as directed by its Board of Directors.”

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Aramco is said to be considering a bond issue to finance a reported 70-percent stake acquisition in petrochemical giant Sabic from PIF. Aramco is being pushed into tapping international bond markets for the Sabic acquisition that could cost between US$50 and US$70 billion.

Now that Aramco’s listing is again delayed, at the very least, international bankers have set their sights on the Sabic deal, an advisor told FT.

By Tsvetana Paraskova for Oilprice.com

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