Russian and Chinese investors in talks about Saudi Aramco IPO involvement

The initial public offering of the world’s biggest oil company is reaching a critical phase. (AFP)
Updated 15 October 2019

Russian and Chinese investors in talks about Saudi Aramco IPO involvement

  • The initial public offering of the world’s biggest oil company is reaching a critical phase

RIYADH: Russian and Chinese investors are keen to be involved in the international element of the forthcoming initial public offering of Saudi Aramco, a Russian business leader told Arab News on Monday.

“I would say that some Russian investors are interested,” said Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF).

“For the sovereign wealth fund (RDIF) to invest in the Aramco IPO is still under discussion. We also have our Russia-China Investment Fund, and we have interest from Chinese investors to get involved in the Aramco IPO. We are still in discussion with our Chinese partners, and with our Russian investors.

“We are thinking what would be the different opportunities, given the interests of China and given the interest of some of the Russian investors. We will have to see how some of the details go, and nothing has been finalized, but there is definitely interest from some Russian and Chinese investors.”

The IPO of Saudi Aramco, the world’s largest oil company, is reaching a critical phase; some observers believe the formal announcement of a listing on the Tadawul, the Saudi stock exchange, is just days away. Having a foreign sovereign investor, as well as a listing on a foreign stock exchange, could be a part of the later strategy to sell about 5 percent of the state-owned company to private investors.

Dmitriev spoke to Arab News in Riyadh at the Saudi Russia CEO Forum, a meeting of top businessmen from both countries to coincide with the visit of President Vladimir Putin. Executives signed a raft of deals as business relations between Saudi Arabia and Russia become increasingly cordial.

“The RDIF jointly with the Public Investment Fund has already invested in 30 different companies, generating very good returns,” Dmitriev said. 

“Today we are signing others in sectors ranging from launching satellites from Saudi territory to railroads to joint projects in petrochemicals to our agreement with Salec for investment in agriculture, as well as in aircraft and other areas.”

He said investment between the two countries would increase more than fivefold in the next two years, and congratulated the Saudi government on Vision 2030 and opening the Kingdom to investment.

Among the deals announced at the Forum was an agreement between RDIF and Tania, the Saudi technology development company, to co-operate on a project to establish commercial launch services for small spacecraft, and an agreement to explore ways for Russian and Saudi railway operators to build transport infrastucture.

Russian and Chinese investors also came together with leading Middle East investors to launch a new pharmaceuticals group, Alium.

Dmitriev said investment prospects in the US were becoming increasingly expensive, and that Russia offered the opportunity for Saudi investors to generate annual returns of about 15 percent.


UBS fined $51 million by Hong Kong regulator for overcharging clients

Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: Swiss bank UBS was fined HK$400 million ($51.09 million) by Hong Kong’s securities regulator for overcharging up to 5,000 clients for nearly a decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said in a statement that an investigation found UBS had overcharged clients on ‘post-trade spread increases’ and charges in excess of standard disclosures and rates between 2008 and 2017.
THE SFC said the investigation exposed ‘serious systemic internal control failures’ at the bank. UBS had failed to disclose conflicts of interests and had overcharged some clients in ‘opaque’ trades, it said.
The overcharging affected 5000 Hong Kong managed client accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the SFC said.
The regulator said the over-charging occurred in the bank’s wealth management division on bond and structured notes transactions.
UBS was found to have increased the spread charged after the execution of a trade without the clients’ knowledge, it said.
In the statement, the SFC said UBS was also found to have falsified some account statements which were issued to financial intermediaries who were authorized to trade for the clients to “conceal the overcharges.”
UBS said the issues were ‘self-reported’ to the SFC and the results found were against the bank’s standard practice.
“The relevant conduct predominantly relates to limit orders of certain debt securities and structured note transactions, which account for a very small percentage of the bank’s order processing system,” the bank said in a statement.
SFC chief executive Ashley Alder said while each “overcharge represented a fraction of each trade” the bank’s “misconduct involved decisions and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
In March, the SFC banned UBS from leading initial public offerings in Hong Kong for a year after it found the bank, and some of its rivals, had failed to carry out sufficient due diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined HK$224 million, Merrill Lynch HK$128 million and Standard Chartered (StanChart) HK$59.7 million, all for failures when sponsoring, or leading, public market floats.