‘Very exciting’ project to be unveiled during Putin visit to Saudi Arabia

Russian President Vladimir Putin told industry leaders at the Energy Week International Forum in Moscow that Russia based its relationships with energy partners worldwide on ‘commerce, not political reasoning.’ (Reuters)
Updated 14 October 2019

‘Very exciting’ project to be unveiled during Putin visit to Saudi Arabia

  • Multimillion-dollar deals expected in oil, agriculture and tourism, Russian investment chief tells Arab News

MOSCOW: Russia and Saudi Arabia are planning to clinch a raft of business and investment deals worth hundreds of millions of dollars during the forthcoming state visit by President Putin to the Kingdom, according to one of the leaders of the Russian business scene.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, told Arab News that there would be new business deals in the oil industry, agriculture, tourism and petrochemicals.

Speaking on the sidelines of the Russia Energy Week summit in Moscow, he said: “We are going to be signing more than 10 new investment agreements between Russia and Saudi Arabia.

“One example is a joint investment with Saudi Aramco in Novomet, a Russian pumps manufacturer, one of the leaders of the industry, supplying pumps to Saudi Aramco, which will be investing with RDIF in this company,” he said.




Russian business leader Kirill Dmitriev is upbeat about new business deals 
being signed during President Putin’s visit to Saudi Arabia. (AFP)

There was one big project which he said was “very exciting” that would be announced during the visit, but he declined to identify this. RDIF is already a partner with the Kingdom’s Public Investment Fund in multibillion-dollar projects in Russia, Dmitriev said.

“We’ve made investments with our Saudi partners of more than $2.7 billion, from the Saudi side. It is already producing good returns and now we expect the fund to begin investing in Saudi projects — in tourism, petrochemicals and other areas.”

Agriculture could be the big beneficiary following a change in Saudi Arabia’s import regime. “Saudi Arabia recently announced it was removing bans on Russian agricultural products, wheat specifically, and we will be signing a big agreement with the Saudi Agricultural Investment and Livestock Company (Salic) during the visit,” he said.

FASTFACT

The Russia Saudi Investment Fund was set up in 2017 and has total committed capital of $6 billion.

RDIF has invested alongside Saudi institutions in a range of infrastructure and energy projects in Russia via the Russia Saudi Investment Fund, which was set up in 2017 and has total committed capital of $6 billion.

Dmitriev said that the recent attacks on Saudi Aramco oil facilities at Abqaiq and Khurais had given the Kingdom the opportunity to demonstrate “tremendous resilience” as it hurried to repair the physical and economic damage to its oil industry.

“It has completely recovered from this oil shock and now we see that everything was fixed very quickly and very orderly, and I think lots of people are very impressed by this,” he said.

He added that the strength of the business relationship between Russia and Saudi Arabia was a testament to the success of the visit of King Salman to Moscow in 2017, and reflected the close relationship between President Putin and Crown Prince Mohammed bin Salman.


Saudi central bank ready for any Aramco-related liquidity squeeze

Updated 33 min 45 sec ago

Saudi central bank ready for any Aramco-related liquidity squeeze

  • Aramco’s long-awaited listing on the Saudi Arabian stock exchange is due on Wednesday
  • The central bank has set up a team to closely monitor all indicators in the banking system during the IPO

RIYADH: Saudi Arabia’s central bank is ready for any liquidity squeeze from Saudi Aramco’s initial public offering (IPO) and is closely monitoring local banks, its governor said, after heavy demand for loans to buy the stock.
Aramco’s long-awaited listing on the Saudi Arabian stock exchange is due on Wednesday, completing the largest IPO on record and raising $25.6 billion from retail and institutional buyers who took on debt to back their orders.
“We don’t rule out that there might be squeeze of liquidity later on, that’s why I am ready and stand ready to intervene,” Ahmed Al-Kholifey told Reuters.
Saudis had clamoured to own part of the “crown jewel” of the world’s top oil exporter in the lead up to its IPO, with Aramco’s institutional tranche 6.2 times oversubscribed, while more than 5 million individuals subscribed to a retail tranche.
The Aramco IPO is the centerpiece of the Saudi crown prince’s plans to diversify the economy away from a reliance on oil, as the money will be reinvested by the Saudi Public Investment Fund (PIF) to promote growth in other sectors.
During the IPO process, the loan-to-deposit ratio (LDR) at some banks had exceeded a 90% “soft guideline” set by the regulator, but the ratio improved after the allocation process ended, Kholifey said in an interview.
“So far no bank has come to ask for liquidity from the central bank. We are ready to intervene in case there is a squeeze of liquidity but most of the indicators right now are not worrying,” Kholifey added.
MONITORING TEAM
The central bank has set up a team specifically to closely monitor all indicators in the banking system during the IPO process, and it held meetings on a daily basis.
“I don’t think in the near future they will settle, we have to keep monitoring the situation until we see things are normal, especially the LDR,” he said.
Saudi corporates snapped up the biggest percentage of allocations to the Aramco IPO at 37.5% and Saudi government institutions were allocated 13.2% of the institutional tranche, the latest figures issued by the deal’s lead bank showed.
Kholifey said that less than 2% of retail subscriptions were leveraged, and most of the bank financing went to high-net-worth individuals and institutional buyers.
He expects most of the IPO proceeds to be invested locally by the PIF, given that most of subscription were internal.
Riyadh scaled back its original IPO plans, scrapping an international roadshow to focus on marketing Aramco to Saudi investors and Gulf Arab allies. It has remained silent on when or where it might list Aramco stock abroad.