In an exclusive interview with Arab News, Mobius, who is executive chairman of FTI’s emerging markets business, said that he expected a big increase in investment opportunities in the Kingdom as part of the economic transformation strategy being pursued under the Vision 2030 reform plan, and was exploring the possibility of a permanent presence in Saudi Arabia.
“In Saudi Arabia we still have to invest via proxies, but it’s quite possible we’d like to invest directly in Saudi Arabia, and we could do that via an office there. Saudi could become very big indeed,” he said.
“We would definitely consider opening an office in Saudi Arabia and getting a full investment licence. What would make it even more attractive would be if the GCC (Gulf Cooperation Council) nations got together and unified their economies in terms of currencies and investment flows. It would be in the interest of Saudi Arabia to encourage that, and eventually include Egypt too in a big trading group,” he added.
Mobius currently invests in listed securities in Saudi Arabia in the food, banking and logistics sector, but is looking to expand his exposure to the country.
“At the moment, out of $500 million we have invested in the Middle East, some $270 million is in Saudi Arabia. But there is $29 billion of assets in the emerging markets group. We could easily double the investment in Saudi equities. If the reforms in the Kingdom move ahead, we could easily absorb another $200 million to $300 million in Saudi Arabia,” he said.
But he added that it was important for Saudi Arabia to be upgraded to emerging market status by MSCI and FTSE Russell, the index compilers. “Inclusion in the indices is vital,” he said.
Mobius, who has been investing in global emerging markets since 1987, said he was interested in any public offering of shares in Saudi Aramco, but with certain caveats.
“There are corporate governance issues that would leave a big question mark. The Saudi government is obviously running the show and will have to make it clear that the quoted element of Aramco is independent of the government. The way to do that is to have truly independent directors and ensure that they and the shareholders will get a chance to vote on key issues,” he said.
There were other issues regarding Aramco, he said. “It would also be good to spin off those things like schools, hospitals and social projects that are not strictly part of the oil business,” he said, although he conceded that dividend policy would be important in determining how global investors viewed these issues.