Investment bonanza: SAMA assets grow to SR2.84 trillion

Updated 08 October 2014

Investment bonanza: SAMA assets grow to SR2.84 trillion

The Saudi Arabian Monetary Agency raised its assets in September by SR39 billion ($10.4 billion) to reach SR2.84 trillion ($757.3 billion), an official statement issued by the central bank said on Tuesday.
“Assets rose by 6.5 percent compared to the same period last year, when assets were worth SR2.66 trillion ($709.3 billion),” it said.
SAMA attributed the increase from August 2013 to August this year to a hike in investment in foreign stocks and bonds, which amounted to SR2.08 trillion, compared with SR1.92 trillion in 2013.
“The volume of foreign currency and gold rose to SR219 billion in 2014, compared with SR202 billion in the previous year,” the statement said.
Economist Abdul Aziz Al-Fahad said SAMA’s assets in foreign countries reflect the Kingdom’s financial strength. “An increase in SAMA assets means improvement in the Kingdom’s financial condition.”
He said the increase in SAMA assets shows the country’s financial stability and its ability to confront economic crises.
“Growing SAMA assets will enable the government to make withdrawals at times of need, especially when its revenues are affected in the future,” he pointed out.
Essam Khalifa, a member of the Saudi Economic Council, said the central bank’s assets showed the Kingdom’s liquidity, including circulated currency and deposits at commercial banks.
“SAMA assets not only represent the government’s investment, but also the wealth of independent public institutions, such as the Public Investment Fund, the General Organization of Social Insurance and the Pension Fund,” he said.

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

Updated 18 November 2019

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

  • Price regarded as a sensible compromise and that it will sell the IPO
  • Experts said the Aramco valuation was justified by the financial metrics

DUBAI: Investment professionals and energy experts delivered a mainly enthusiastic response to the pricing of shares in Saudi Aramco and the overall valuation of the biggest oil company in the world at between $1.6 trillion and $1.7 trillion.

Al Mal Capital, a Dubai-based investment bank, said that it was positive on the Aramco initial public offering (IPO) on that kind of valuation, which it said was justified by the financial metrics.

“We believe Aramco’s IPO is a central pillar of Saudi Arabia’s Vision 2030. In our view, the broader privatization of state assets will likely accelerate the flow of foreign capital into the Kingdom, improve liquidity and transparency as well as continue to help diversify its economy away from its dependency on oil. While many investors were skeptical about the ability of Saudi Arabia to roll out its ambitious agenda, they seem to be right on track.”

Tarek Fadhallah, chief executive officer of Nomura Asset Management in the Middle East, said via Twitter: “My first impression is that the price is a sensible compromise and that it will sell the IPO. Aramco should easily raise the $8.5bn from retail investors but the 29 global coordinators, managers and financial advisers will need to find the other $17 billion. A few billion from China would help.”

Robin Mills, chief executive of the Qamar Energy consultancy, said; “I think it’s a reasonable compromise. The price is well above most independent valuations but well below the aspirational price. It implies dividend yields a bit lower than the super-majors (the independent oil companies), but a similar price earnings ratio (the measure of the share price rated according to profits). Retail and local investors should be sufficient. We’ll have to see about the foreign investors.”

Ellen Wald, energy markets consultant and author of the book Saudi, Inc., said American investor would still be undecided on the IPO. 

“Remember, investors don’t put money in because they think the value is accurate. Smart investors put money in because they think the value will rise. It all depends on whether they see signs the price will rise during their time frame.”

American oil finance expert David Hodson, managing director of BluePearl Management, said: “This valuation seems to be more reasonable based on the fundamentals. Potential investors in Western markets will base their decision on cold hard facts like dividends and growth prospects. From what we now know, Aramco is offering them a compelling investment proposition to consider.”