When news broke in January that Saudi Arabia was considering an initial public offering of its state-owned oil company, the first reaction on Wall Street was shock. Then calls began pouring into Dubai, the Middle East’s financial hub, from senior bankers in London and New York.
Investment banks around the world are clamouring to join what promises to be a bonanza – and not just the IPO of Saudi Arabian Oil Company, or Aramco, which could be valued at upwards of US$2 trillion. The kingdom is planning to sell hundreds of state assets to bolster its finances and reduce dependence on oil. That includes as much as $15bn of bonds.
Saudi Arabia looks even more promising with investment banking in a global slump and Brexit set to deter dealmaking for months to come. “Saudi Arabia is close to the top, if not at the top, of the agenda for banks,” said Christopher Wheeler, an analyst with Atlantic Equities in London.
Fees paid to banks in the kingdom jumped by almost a third to about US$100 million in the first five months of the year, according to New York research firm Freeman. While that is a fraction of what investment banks generate in the United States and Europe, the work of diversifying the kingdom’s economy is just starting.
International banks are adding staff, dispatching top executives to Riyadh and promoting Saudis to senior roles. Among the biggest banks, HSBC and JP Morgan Chase appear to have a head start.
HSBC is working on the privatisation of the Saudi stock exchange and the potential break-up of Saudi Electricity. Stuart Gulliver, the chief executive of the London bank, travels to the kingdom regularly to meet decision makers.
Influential Roles
Two HSBC bankers recently jumped to government roles. Mohammad Al Tuwaijri, the chief executive for the Middle East, was appointed as the deputy economy and planning minister in May. Fahad Al Saif, the general manager of global banking and markets at HSBC’s Saudi British Bank, is starting a debt management office that will be responsible for the kingdom’s first international bond sale.
HSBC and JP Morgan, along with Citigroup, were picked just days ago to arrange that offering. Officials at the three companies declined to comment on their Saudi operations.
JP Morgan advised the Saudi Public Investment Fund on its $3.5bn investment in Uber Technologies this month. It also has an advisory role with Aramco. The US’s largest bank set out at the beginning of the year to increase its Saudi staff of 65 by about 10 per cent, said Bader Alamoudi, the chief executive of its local investment-banking unit in January.
Huge Potential
Deutsche Bank, which has about 80 people in the country, named Jamal Al Kishi, a Saudi national, as its chief executive for the Middle East and Africa earlier this year.
“We view Saudi Arabia as a core growth market with huge potential for global investment banks,” said Tamim Jabr, Deutsche Bank’s head of corporate and investment-banking coverage in Saudi Arabia.
The Morgan Stanley president, Colm Kelleher, who travelled to Riyadh last month, told Saudi Arabia's Al Eqtisadiah newspaper that his visit was to reaffirm the bank's commitment to the Saudi market. An official at the New York firm declined to comment.
The big banks are also vying with smaller firms. Verus Partners, a London advisory boutique co-founded by the former Citigroup bankers Mark Aplin and Andrew Elliott, helped Saudi Arabia secure its first loan in 15 years in April, when the government raised $10bn from banks.
Michael Klein, another former Citigroup investment banker, is advising Aramco on its IPO. Mr Klein’s firm is providing strategic advice to the government, while JP Morgan is working on preparations for the IPO and may be among the banks that underwrite the offering.
To reduce the importance of oil, the deputy crown prince, Mohammed bin Salman, wants to build the country’s sovereign wealth fund into the world’s largest and increase the proportion of its foreign investments to half, from 5 per cent.
“It’s going to be a fees feast for investment banks,” said John Sfakianakis, the head of economic research at the Gulf Research Centre, a think tank in Jeddah. “No one else in the Middle East, and maybe even emerging markets globally, is embarking on such deep reforms.”
The Aramco IPO would generate at least $50m in banking fees, according to an estimate from Freeman. The kingdom provides a bright spot for investment banks, whose earnings are under pressure from record-low interest rates and escalating capital requirements.
Big Wallet
Bankers typically earn less on deals in Saudi Arabia. On the IPO of National Commercial Bank, bankers, lawyers and accountants split 25 million Saudi riyals (Dh24.4m), or about 0.1 per cent of the deal’s size. That compares with an average of 2.7 per cent for banks underwriting IPOs in Europe, the Middle East and Africa in 2014.
“Banks are seeing a big wallet to go after and they won’t want to miss out,” Mr Wheeler said. “With oil unlikely to return to historical highs, there will be a consistent stream of business coming out of Saudi Arabia for years to come.”
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PROFILE
Name: Enhance Fitness
Year started: 2018
Based: UAE
Employees: 200
Amount raised: $3m
Investors: Global Ventures and angel investors
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
'Outclassed in Kuwait'
Taleb Alrefai,
HBKU Press
Where to submit a sample
Volunteers of all ages can submit DNA samples at centres across Abu Dhabi, including: Abu Dhabi National Exhibition Centre (Adnec), Biogenix Labs in Masdar City, NMC Royal Hospital in Khalifa City, NMC Royal Medical Centre, Abu Dhabi, NMC Royal Women's Hospital, Bareen International Hospital, Al Towayya in Al Ain, NMC Specialty Hospital, Al Ain
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
The years Ramadan fell in May
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Brief scores:
Manchester City 3
Bernardo Silva 16', Sterling 57', Gundogan 79'
Bournemouth 1
Wilson 44'
Man of the match: Leroy Sane (Manchester City)
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Uefa Nations League
League A:
Germany, Portugal, Belgium, Spain, France, England, Switzerland, Italy, Poland, Iceland, Croatia, Netherlands
League B:
Austria, Wales, Russia, Slovakia, Sweden, Ukraine, Republic of Ireland, Bosnia-Herzegovina, Northern Ireland, Denmark, Czech Republic, Turkey
League C:
Hungary, Romania, Scotland, Slovenia, Greece, Serbia, Albania, Norway, Montenegro, Israel, Bulgaria, Finland, Cyprus, Estonia, Lithuania
League D:
Azerbaijan, Macedonia, Belarus, Georgia, Armenia, Latvia, Faroe Islands, Luxembourg, Kazakhstan, Moldova, Liechtenstein, Malta, Andorra, Kosovo, San Marino, Gibraltar
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
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Transmission: Single-speed automatic
Price: From Dh219,000
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Dubai World Cup Carnival Thursday race card
6.30pm: Dubai Millennium Stakes Group Three US$200,000 (Turf) 2,000m
7.05pm: Handicap $135,000 (T) 1,600m
7.40pm: UAE Oaks Group Three $250,000 (Dirt) 1,900m
8.15pm: Zabeel Mile Group Two $250,000 (T) 1,600m
8.50pm: Meydan Sprint Group Two $250,000 (T) 1,000m
9.25pm: Handicap $135,000 (D) 1,400m
10pm: Handicap $135,000 (T) 1,600m
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
The five pillars of Islam
