Saudi-Clariant chemical deal is murky concoction 18 Sep 2018 The Swiss group is setting up a joint venture with 25 pct shareholder Saudi Basic Industries. At the same time SABIC will contribute a new Clariant CEO and four board directors. Though the venture should make sense, the company’s governance becomes more complicated.
U.S. oil producers lose grip on global crown 14 Sep 2018 Fields in Texas were meant to help make the country a bigger exporter of black gold than Saudi next year. But pipeline construction is delayed longer just as American inventories are falling. U.S. drillers risk losing control of the market the longer logistics problems linger.
Latest Gulf bank merger is defensive on all fronts 4 Sep 2018 Abu Dhabi Commercial Bank is following UAE and Saudi peers in mulling a merger. Synergies from a tie-up with Union National Bank and Al Hilal Bank would offset oil-related headaches. But it also makes ADCB better able to challenge newly merged rival First Abu Dhabi Bank at home.
Norway and Saudi face two sides of same problem 24 Aug 2018 Oslo’s $1 trillion wealth fund wants to shed its oil and gas stocks, but a cautious government may not let it. Riyadh’s $250 billion equivalent wants steady growth, but the state may push it into leveraged, risky ventures. Both need more independence, and less political meddling.
Aramco’s failed IPO is a beginning not an end 22 Aug 2018 Saudi’s oil company has called off its $2 trillion stock listing. An army of investment bankers has been spared the need to sell an overambitious deal to unwelcoming markets. But there are plenty more Saudi deals to be done – which advisers will hope can be more easily executed.
Saudi’s investment fund: the view from 2023 20 Aug 2018 The kingdom wants to expand the assets of its Public Investment Fund by 60 percent by 2020 as it diversifies away from oil. That involves it taking some big, risky bets. Breakingviews imagines the letter its chief executive will write five years hence.
Tesla is risky vehicle for Saudi reform drive 14 Aug 2018 The Gulf state wants to diversify away from oil and might help take the auto group private, reckons CEO Elon Musk. That’d be a mistake. Tesla could flop even if electric cars take off, and Musk’s buyout price is too high. There are cheaper ways to play the energy transition.
Saudi’s fund manager-in-chief veers off-piste 10 Aug 2018 Mohammed bin Salman wants to diversify the desert kingdom away from oil. Buying pricey Tesla stock while selling Canadian assets seems a strange way to do that, though. To stop further net outflows of capital, the crown prince could do with sticking more closely to his mandate.
Tesla buyout would need to go short on leverage 7 Aug 2018 Elon Musk wants to drive the unprofitable electric-car maker off the public market at a $72 bln sticker price. Banks would balk at lending much more than a third of that, so he’d need to persuade shareholders to stay and big investment funds to jump in. That’s eminently doable.
SoftBank is the disruptor of technology disruptors 3 Aug 2018 Masayoshi Son’s investment mammoth is wreaking havoc across Silicon Valley and beyond. The $100 bln Vision Fund makes traditional venture-capital funds look puny, gives startups unimagined firepower, and distorts valuations and IPO markets. Tech finance can scarcely keep up.
Saudi’s Aramco plan B is too clever by half 27 Jul 2018 With the oil giant’s listing stalled, Riyadh wants to lever it up to buy a stake in chemicals group SABIC. It shouldn’t overburden Aramco, and offers a roundabout way of getting money to the state. But compared to an IPO it’s riskier, and does less to boost Saudi capital markets.
Aramco’s downstream diversion solves few problems 19 Jul 2018 Buying a stake in petrochemical maker SABIC would enable the Saudi oil giant to diversify its business. But it complicates the government’s plans to open state companies to private capital. And the holding is too small to pump up Aramco’s valuation in an initial public offering.
Aramco fail hits Saudi ambition more than coffers 10 Jul 2018 If the state oil firm's IPO doesn't fly, Crown Prince Mohammed bin Salman will be $100 bln short. That's huge, but higher crude prices will help the budget and Riyadh can borrow too. The bigger problem is finding other ways to lure the foreign capital his 2030 vision depends on.
Aramco IPO retreat would leave few losers 6 Jul 2018 Pinning a $2 trln valuation on a company worth $1.6 trln was always going to be risky for the Saudi oil giant’s bankers. If Aramco’s IPO is scrapped, they may get another bite at a more modest cherry. It would, though, sting regulators who bent over backwards to accommodate it.
Bond markets start to call Saudi bluff on Bahrain 26 Jun 2018 The tiny Gulf kingdom’s bond yields are spiking. Bahrain’s borrowing and dependence on a high oil price make its debt hard to sustain. But Saudi Arabia has no interest in its neighbour devaluing or falling apart. The more markets push, the more likely Riyadh is to step in.
Saudi Arabia finds OPEC solution that helps itself 22 Jun 2018 At the oil producer group’s Vienna meeting Riyadh needed to hike output without sparking an Iranian walkout. It succeeded, and in a way that could gee Saudi oil revenue. The catch is that President Donald Trump may soon twig that the deal may not help to curb high oil prices.
Saudi index win is stepping stone not step change 21 Jun 2018 Adding the kingdom to MSCI’s emerging markets index helps Riyadh internationalise its capital market by potentially sucking an extra $44 bln into domestic stocks. Yet the catalyst for a real transformation – a domestic listing of oil giant Aramco – remains up in the air.
UK’s Aramco sop could lead to worst of both worlds 8 Jun 2018 The UK regulator is bending its own rules to entice the oil giant to London. The plan will weaken tough laws that safeguard competition and protect minority investors. Making legal exceptions for opaque companies is a slippery slope – and there’s no guarantee Britain will win.
OPEC supply easing is more reset than U-turn 25 May 2018 Saudi Arabia and Russia may lift oil output by 1 million barrels per day. Though that could knock prices, production of the black stuff will be more in line with the cartel’s previously agreed curbs. It’s a more far-sighted plan than allowing the value of crude to keep rising.
OPEC high point is an Indian summer 16 May 2018 The cartel’s biggest member, Saudi Arabia, wants oil to reach $100 per barrel. West Texas bottlenecks offer hope prices could get close. But cyclical forces are at work. Fresh pipeline capacity will unleash a tidal wave of supply. With prices high, demand will fall, too.