Saudi crown prince signs business deals, woos investors as he continues US tour

Crown Prince Mohammed and his large delegation met with heads of technology and industry giants.
Sunday 01/04/2018
Saudi Crown Prince Mohammed bin Salman bin Abdulaziz (C) looks at a quadruped robot during his visit to the Massachusetts Institute of Technology (MIT), on March 24.(Saudi Royal Palace)
Exploring opportunities. Saudi Crown Prince Mohammed bin Salman bin Abdulaziz (C) looks at a quadruped robot during his visit to the Massachusetts Institute of Technology (MIT), on March 24.(Saudi Royal Palace)

WASHINGTON - Saudi Crown Prince Mohammed bin Salman bin Abdulaziz’s US visit was intended as a mix of diplomacy and business to strengthen political and financial ties between the Saudi government and the Trump administration.

Chief among Crown Prince Mohammed’s goals during his US tour has been to secure commitments of American investment in the Saudis’ Vision 2030 economic restructuring programme. However, the chances of an American role in one of the Riyadh’s priority projects — the initial public offering (IPO) of Saudi state oil and gas giant Saudi Aramco — appear to be dimming.

In an urgent drive to secure American investment, Crown Prince Mohammed and his large delegation met with heads of technology and industry giants Amazon, Apple, Google and Pfizer and leading financial institutions, including JPMorgan Chase, Bank of America, Goldman Sachs and Citigroup.

Saudi Commerce and Investment Minister Majid al-Qasabi said: “We have missed a lot of opportunities in the past. We cannot afford to lose it now. We are racing out of time.”

Following the crown prince’s meetings in Washington, including with US President Donald Trump, the Saudi royal travelled to Boston, where he witnessed the signing of technology research agreements between the Massachusetts Institute of Technology and Saudi entities.

In New York, Crown Prince Mohammed participated in the 2018 Saudi-US CEO Forum, with several partnerships subsequently announced. These included Saudi Aramco and Google working together on national cloud services and other technology services, Saudi Aramco and Raytheon establishing national security services and a memorandum between the Saudi Industrial Development Fund and JPMorgan Chase to consider collaborating on industrial financing in the kingdom.

The Saudi Press Agency tweeted a photo of Crown Prince Mohammed and Softbank CEO Masayoshi Son, saying that the two were “looking for a number of investment opportunities.” Softbank, a Japanese tech investment giant, has created the world’s largest private equity fund, Softbank Vision Fund, in conjunction with Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, with backers including Abu Dhabi’s Mubadala Investment and Apple.

The Softbank Vision Fund’s emphasis is on investing in technology sectors such as robotics and artificial intelligence. However, Son announced that the fund would invest in the world’s biggest solar power project to be built in Saudi Arabia, with the capacity to produce 200 gigawatts by 2030.

A top priority of King Salman bin Abdulaziz Al Saud’s rule has been to drum up US interest in Vision 2030, of which the cornerstone is the impending IPO involving up to a 5% sale of shares in state oil and gas giant Saudi Aramco.

Reports suggested that not only is Riyadh likely to postpone the IPO into 2019 — after repeated claims by Saudi officials that it would be conducted in the latter half of 2018 — but that it might not include foreign bourses. The reports said the Saudi stock exchange, the Tadawul, could be the sole bourse with perhaps a private sale to institutional investors.

Crown Prince Mohammed stated that the Aramco IPO would take place in late 2018 or early 2019, depending on “financial market conditions.”

The crown prince’s initial desire was to have the New York Stock Exchange (NYSE) involved in the IPO and Trump has pushed the Saudi leadership to float Saudi Aramco shares on the NYSE. That scenario has become increasingly unlikely. Riyadh is reluctant to expose itself to litigation stemming from the Justice Against Sponsors of Terrorism Act, legislation passed by the US Congress in September 2016 that provides families of 9/11 victims the ability to sue the Saudi government.

Before Crown Prince Mohammed’s trip, Saudi Foreign Minister Adel al-Jubeir and Saudi Aramco officials received a surprisingly lukewarm response from representatives of US hedge funds and mutual funds in meetings to gauge interest in the IPO.

At least part of that reluctance is associated with concerns about the Saudi regime’s seemingly inflated assessment of Saudi Aramco’s valuation of $2 trillion and the size of the dividends that the company is willing to pay. There are questions about the kingdom’s political stability following the Saudi government’s anti-corruption crackdown in November involving the arrests of royals, former and current cabinet ministers and prominent businessmen and reports of the mistreatment and intimidation of those individuals even after settlements had been reached.

Crown Prince Mohammed’s US itinerary includes stops in Seattle, San Francisco, Los Angeles and Texas, where he is to tour the country’s largest oil refinery, which is owned by Saudi Aramco’s Motiva Enterprises.

2