In an extensive interview with Bloomberg Saudi Arabia’s deputy crown prince Mohammed bin Salman outlined his vision for several major economic initiatives. These include a plan to offer shares in all of Saudi Arabian Oil Company (Saudi Aramco) rather than just it’s downstream and refining assets. “The mother company will be offered to the public as well as a number of its subsidiaries.” The total stake would be “less than 5 percent” and Saudi Aramco might be listed on the Saudi domestic stock exchange as early as 2017.
Along with the proposed share offering, Saudi Aramco is making a strong push to expand it’s downstream and refining holdings. “The Saudi deputy crown prince said Aramco will continue to grow through investments in the refining industry in countries including China, India, South Africa and Indonesia. “We’re also targeting the U.S. market including the recent deal we’ve made with Shell,” he said.”
The Saudi government will still own the rest of Saudi Aramco but the share sale will be part of a plan to significantly expand the country’s Public Investment Fund (PIF) which currently holds stakes in key Saudi sectors and industries including Saudi Basic Industries Corporation (SABIC). Bringing a portion of Saudi Aramco to the stock market could, in theory, push PIF’s assets past the sovereign wealth funds in Norway and Abu Dhabi.
The operating guidelines of the PIF would also be adapted with the fund taking on a more aggressive investment approach. “PIF ultimately plans to increase the proportion of foreign investments to 50 percent of the fund by 2020 from 5 percent now, said Yasir Alrumayyan, secretary-general of the fund’s board.” Alrumayyan commented that the PIF was adding market specialists as well as private equity and risk management expertise and is currently considering opportunities in the financial industry.
“He has an obsession for moving Saudi Arabia away from oil,” said John Micklethwait, a Bloomberg reporter who interviewed the deputy crown prince on Bloomberg TV.
Deputy Crown Prince Mohammed bin Salman. Photo provided to Bloomberg via the Saudi Royal Court.
These initiatives are part of an ambitious plan to contain spending, improve governance and diversify the Saudi economy. They are some of the more shiny elements of a larger National Transformation Plan to be announced shortly.
Prince Mohammed bin Salman ascended to become deputy crown prince in January 2015 when his father, the then-crown prince Salman became king.
MbS, as he is often referred to informally, is minister of defense and chair of the powerful Council of Economic Development Affairs, or CEDA, which is in control of much of Saudi Arabia’s economy.
