Russian investors eye Aramco share deal ahead of IPO

Kirill Dmitriev, CEO of the Russian Direct Investment Fund which is reported to be interested in particpated in the planned Saudi Aramco IPO. (Reuters)
Updated 24 January 2018
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Russian investors eye Aramco share deal ahead of IPO

DAVOS: Russian investors have approached Saudi Aramco with a proposal to take a stake in the Kingdom’s oil giant as it gears up for an initial public offering on local and global stock markets later this year.
The approach is being considered, alongside several other options for the sale of shares in Aramco, but so far no decision has been taken on whether it will proceed to a full deal, according to people familiar with the Russian move, who did not want to be identified. They were speaking at the World Economic Forum annual meeting in Davos.
There is also the possibility of a joint investment by Russian and Chinese investors. Several institutions from the two counties have formed joint vehicles for investment, with a big emphasis on energy and other infrastructure projects.
Reuters reported that Kirill Dmitriev, head of the Russian Direct Investment Fund, was considering an investment in Aramco as part of a long-term strategy for Russia and Saudi Arabia to coordinate energy policy more closely.
“We see great interest in the Aramco IPO from Russian pension funds as well as from our Chinese partners,” Dmitriev told Reuters.
Aramco has already said it is considering a wide range of options for the IPO, which would be by far the biggest in history if it meets official valuations.
Policymakers in the Kingdom have said they would sell 5 percent of Aramco, with an official valuation of $2 trillion on the whole company.
If the Russians bought $10 billion of shares — as has been speculated — it would represent 10 percent of the shares in sale in an IPO at the official valuation.
Options under discussion include a big sale on an international stock exchange in conjunction with a listing on the Tadawul market in Riyadh; an option for a private sale of shares to foreign investors; or a trade sale at the same time as a Riyadh listing with a commitment to sell more on a global exchange later on.
Policymakers have repeatedly committed to undertake an IPO In 2018, without specifying the exact form the share offering would take.
Aramco’s priority is to maximize the valuation of the IPO as a way of demonstrating the value of Aramco to the KIngdom, and in comparison with its international peers in the oil industry.
Aramco has by far the biggest reserves of crude of any oil company in the world, and even after agreeing cuts with non-OPEC member Russia last year, still exports more oil than any other company.
Independent valuations of Aramco’s reserves are in progress, and regarded as essential to helping achieve IPO targets.


Indonesia’s Go-Jek close to profits in all segments

Updated 18 August 2018
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Indonesia’s Go-Jek close to profits in all segments

  • Go-Jek is Indonesia's first billio-dollar startup
  • Ride haling app evolves into online payment platform

JAKARTA: Go-Jek, Indonesia’s first billion-dollar startup, is “extremely close” to achieving profitability in all its segments, except transportation, its founder and CEO Nadiem Makarim told Reuters.

Launched in 2011 in Jakarta, Go-Jek — a play on the local word for motorbike taxis — has evolved from a ride-hailing service to a one-stop app allowing clients in Southeast Asia’s largest economy to make online payments and order everything from food, groceries to massages.

“We’re seeing enormous online to offline traction for all of our businesses and are close to being profitable, outside of transportation,” said the 34-year old CEO.
The startup is expected to be fully profitable “probably” within the next few years, Makarim added.

Already a market leader in Indonesia, where it processes more than 100 million transactions for its 20-25 million monthly users, Go-Jek is now looking to expand in Southeast Asia.

Ride hailing services in Southeast Asia are expected to surge to $20.1 billion in gross merchandise value by 2025 from $5.1 billion in 2017, according to a Google-Temasek report.

Go-Jek said in May it would invest $500 million to enter Vietnam, Singapore, Thailand and the Philippines, after Uber struck a deal to sell its Southeast Asian operations to Grab — the bigger player in the region.

Go-Jek is seeing strong funding interest from its backers as it targets an aggressive expansion, Makarim said.

“Since its Aug. 1 launch, the app has already grabbed 15 percent of market share in Ho Chi Minh,” Makarim said. The firm this week opened recruitment for motorcycle drivers in Thailand.

The startup expects anti-monopoly concerns swirling around the Grab-Uber deal, which Singapore said had substantially hurt competition, to help clear a path for its expansion.

“We’re bringing back choice. The Singapore government is particularly eager to bring back competition,” Makarim said, adding that the order of overseas rollouts had not been set.

Go-Jek’s offshore push comes at a time when Singapore-based Grab is stepping up funding to expand in Indonesia and transform itself into a consumer technology company, starting with a partnership with online grocer HappyFresh.

“Mimicking Go-Jek’s strategy is the highest form of flattery,” laughed Makarim.

Grab told Reuters in a statement, “The super app strategy has been around for a while now and no Southeast Asian player can claim to have pioneered it.” The company also said Grab has not lost market share in Ho Chi Minh since August, but declined to provide market share data.

Makarim believes Go-Jek’s understanding of food merchants will give it an edge over Grab, which counts investors such as Chinese ride-hailing firm Didi Chuxing and Japan’s SoftBank Group Corp. among its backers.

Makarim, who sees food delivery as Go-Jek’s core business, said he was not concerned about funding, without giving details.

Go-Jek was reported in June as being in talks to raise $1.5 billion in a new funding round and was valued at about $5 billion in a prior fundraising, sources have told Reuters. The firm had said in March it was considering a domestic IPO.

Makarim noted Go-Jek’s backers were sharing both capital and expertise. The company is collaborating with Alphabet Inc’s Google on platform mobility, Tencent on payments strategy, JD.com on logistics operations, and Meituan Dianping on merchant transactions and deliveries.

Go-Jek has set up a venture capital arm, Go-Ventures, to invest in startups in Southeast Asia “with strategic importance to our business,” the CEO said.