China is reportedly considering a $10 billion investment in Saudi Aramco's record-shattering IPO

Reuters
  • Chinese state-owned businesses and funds are considering investing up to $US10 billion in Saudi Aramco’s initial public offering, Bloomberg reported Wednesday.
  • Saudi Arabia has been looking for foreign governments to buy into its massive IPO and boost investor interest, sources familiar with the matter told Bloomberg.
  • The Silk Road Fund, oil producer Sinopec Group, and sovereign wealth fund China Investment Corp. are among the firms in talks to buy Aramco shares.
  • The final list of entities investing, and how big their stakes are, will ultimately be decided by the Chinese government, according to Bloomberg.
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Chinese government-owned entities are considering investing $US5 billion to $US10 billion in Saudi Aramco’s mammoth initial public offering, Bloomberg reported Wednesday morning.

Saudi Arabia has been looking for foreign governments to buy into its historic offering and attract additional investor interest, people familiar with the matter told Bloomberg. China President Xi Jinping has simultaneously been looking to boost the country’s international reputation amid slowing economic growth.

Among the Chinese state-owned firms interested in the stake are the Silk Road Fund, oil producer Sinopec Group, and sovereign wealth fund China Investment Corp., according to Bloomberg. The full lineup of investors and their respective investments aren’t yet formalized and will be determined by the Chinese government.

Other state-owned businesses and funds may join in building up the Chinese stake, sources told Bloomberg. The investment supports the Chinese government’s “One Belt, One Road” trade plan, and would expose the nation to a new way to profit from rising oil prices.

Aramco, the world’s most profitable company, officially kicked off its IPO Sunday, announcing it would likely begin listing shares of the offering on Riyadh’s local exchange in December. The Tadawul All Share Index sank 2.4% on the news as investors sold other Saudi stocks in preparation for the IPO.

The firm is reportedly targeting a valuation between $US1.5 billion and $US2 billion, though some analysts have balked at the lofty estimate. Banks involved in the listing offered multibillion-dollar ranges in their projections, Bloomberg previously reported. Bank of America’s valuation ranges from $US1.22 trillion to $US2.27 trillion, a gap that could fit the combined market caps of Chevron,ExxonMobil, and Shell.

Aramco’s public debut is a linchpin in the Saudi government’s plan to shift economic dependence from oil. Proceeds from the offering are expected to go to the nation’s sovereign wealth fund, which holds assets managed by SoftBank and Blackstone, according to Bloomberg.


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