Saudi Arabia’s PIF could see big profit on Uber stake, Future Investment Initiative forum hears

Uber may put forth an initial public offering early next year that values the ride-hailing business at as much as $120 billion, according to a media report. (AP)
Updated 23 October 2018
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Saudi Arabia’s PIF could see big profit on Uber stake, Future Investment Initiative forum hears

  • Lubna Olayan, head of the Olayan Group conglomerate, highlighted a potential doubling in the value of PIF’s stake in Uber
  • Saudi Arabian sovereign wealth fund is potentially looking at a windfall profit on its investment in Uber Technologies

RIYADH: The Public Investment Fund (PIF), the Saudi Arabian sovereign wealth fund, is potentially looking at a windfall profit on its investment in Uber Technologies, the American ride-hailing company, it emerged at the Future Investment Initiative in Riyadh.
Lubna Olayan, head of the Olayan Group conglomerate, highlighted a potential doubling in the value of PIF’s stake in Uber if the San Francisco firm goes ahead with an initial public offering next year.
Speaking on a panel entitled “Can global investment inspire a collective vision of the future,” she remarked that PIF first invested $3.5 billion in Uber in 2016 when it was valued at approximately $60 billion.
“Now the forecast valuations for the IPO are around $120 billion. Congratulations,” she said to Yasir Al-Rumayyan, managing director of PIF.
Al-Rumayyan replied: “Uber is creating lots of jobs in Saudi Arabia and making life easier for drivers, customers and shareholders.”
PIF’s profit on any Uber IPO could be even bigger, because the Saudi organization is a major investor in the SoftBank Vision Fund, which is also holds a sizeable chunk of Uber shares from a later round of fundraising.
Al-Rumayyan told the forum that PIF’s holdings are on track to be valued at $400 billion by 2020, and $2 trillion by 2030. By then, he said, PIF’s portfolio would be split 50-50 between domestic and global investments. About 10 percent of PIF’s funds are currently invested outside Saudi Arabia.
Al-Rumayyan said it was not true that all of PIF’s investments went into high-tech assets, pointing to its 50 percent stake of a $40 billion infrastructure fund in partnership with US group Blackstone, and the hotel chain Accor.
In Saudi Arabia, PIF wants to broaden its investment in the economy, especially in the tourism and entertainment sectors. “We did not have these interests before and we want to enhance these sectors,” Al-Rumayyan said.


Global oil demand under threat from cleaner fuel

Updated 14 November 2018
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Global oil demand under threat from cleaner fuel

  • Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook
  • The IEA’s central scenario is for demand to grow by about 1 million bpd on average every year to 2025

LONDON: Electric vehicles and more efficient fuel technology will cut transportation demand for oil by 2040 more than previously expected, but the world may still face a supply crunch without enough investment in new production, the International Energy Agency (IEA) said on Tuesday.
Oil demand is not expected to peak before 2040, the Paris-based IEA said in its 2018 World Energy Outlook. The IEA’s central scenario is for demand to grow by about 1 million barrels per day (bpd) on average every year to 2025, before settling at a steadier rate of 250,000 bpd to 2040 when it will peak at 106.3 million bpd.
“In the New Policies Scenario, demand in 2040 has been revised up by more than 1 million bpd compared with last year’s outlook, largely because of faster near-term growth and changes to fuel efficiency policies in the United States,” the agency said.
The IEA believes there will be about 300 million electric vehicles on the road by 2040, no change on its estimate a year ago. But it now expects those vehicles will cut
demand by 3.3 million bpd, up from a previous estimated loss of 2.5 million bpd in its last World Energy Outlook.
“Efficiency measures are even more important to stem oil demand growth: Improvements in the efficiency of the non-electric car fleet avoid over 9 million bpd of oil demand in 2040,” the IEA said.
Oil demand for road transport is expected to reach 44.9 million bpd by 2040, up from 41.2 million bpd in 2017, while industrial and petrochemical demand is forecast to reach 23.3 million bpd by 2040, from 17.8 million bpd in 2017.
All global oil demand growth will stem from developing economies, led by China and India, while demand in advanced economies is expected to drop by more than 400,000 bpd on average each year to 2040, the IEA said.
The IEA, which advises Western governments on energy policy, maintained its forecast for the global car fleet to nearly double by 2040 from today, growing by 80 percent to 2 billion.
On the supply side, the US, already the world’s biggest producer, will dominate output growth to 2025, with an increase of 5.2 million bpd, from current levels of about 11.6 million bpd. From that point onwards, the IEA expects US oil production to decline and the market share of the Organization of the Petroleum Exporting Countries (OPEC) to climb to 45 percent by 2040, from closer to 30 percent today.
New sources of supply will be needed whether or not demand peaks, the agency said.
“The analysis shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their
current low levels,” IEA director Fatih Birol said.
“Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million bpd from today to 2025, the equivalent of adding another Russia to global supply in seven years, which would be a historically unprecedented feat.”