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Citigroup says Saudi Arabia is best emerging market for deals

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[DUBAI] Saudi Arabia's planned privatisations, including a share sale in the world's biggest oil company, represent the biggest investment banking opportunity in emerging markets, according to Citigroup Inc.

Implementation of the kingdom's plans to restructure the economy - known as Vision 2030 - "could translate into a fantastic wallet for the investment banks," Omar Iqtidar, Citigroup's head of investment banking in the Middle East, said in an interview in Dubai. "We are seeing momentum picking up, with skeptics increasingly converted into believers of the restructuring," he said.

Deputy Crown Prince Mohammed bin Salmanis overseeing an unprecedented shakeup of the biggest Arab economy as the country seeks to reduce its reliance on oil after a plunge in prices that started in 2014. The country plans an initial public offering of Saudi Arabian Oil Co., which the prince said may value the company at more than US$2 trillion.

The Aramco share sale is part of the prince's strategy to create a sovereign wealth fund that will eventually control more than US$2 trillion and boost income from investments. The country is also seeking to potentially breakup its state-owned utility Saudi Electricity Co. into four independent power generating companies.

Global investment banks are jostling for roles advising the government on everything from sovereign loans to IPOs. JPMorgan Chase & Co. and Michael Klein, the former Citigroup investment banker who runs his own boutique, have been selected to advise on state-owned Saudi Aramco's IPO, people familiar with the matter said in April. Saudi Arabia's stock exchange, the biggest in the Middle East and Africa, has hired HSBC Saudi Arabia Ltd as a financial adviser for its initial public offering, scheduled for 2018.

Citigroup last year won approval to trade Saudi Arabian equities, its first banking license since exiting the country in 2004, people with knowledge of the matter said in September. The bank is directly investing in companies listed on the Saudi Stock Exchange after the stock market opened to direct foreign investment last June.

The New York-based bank sold its 20 percent stake in the Saudi American Bank, now known as Samba Financial Group, to the state Public Investment Fund for $760 million in 2004, ending a business that it helped form in 1955. It has still won a role advising on some of the largest deals from the country, including Saudi Basic Industries Corp's acquisition of General Electric Co's plastics unit for US$11.6 billion in 2007. It was also part of Saudi Aramco's US$10 billion loan in 2015.