Aramco hires Moelis to raise billions from asset sales

[DUBAI] Saudi Arabia is looking to emulate neighbouring Abu Dhabi by using its state energy firm to raise billions of dollars from investors, as the kingdom seeks cash to counter a severe recession.

Saudi Aramco, the world's biggest oil company, has hired Moelis & Co to devise a strategy for selling stakes in some subsidiaries, according to people familiar with the matter.

The plan includes raising around US$10 billion from a stake sale in Aramco's pipelines, said the people, who asked not to be identified because the matter is private.

Moelis declined to comment. Aramco didn't immediately respond to emails requesting comment.

Saudi Arabia has been hammered this year by coronavirus lockdowns and the slump in crude prices. The economy will contract 5.4 per cent in 2020, the most since the 1980s, according to the International Monetary Fund. The budget deficit could widen to 12 per cent of gross domestic product.

Oil-producing Gulf Arab economies have been forced to accelerate efforts to attract investment.

Moelis had a broader strategic role in helping Abu Dhabi National Oil Co (Adnoc) raise more than US$15 billion this year from the likes of Apollo Global Management, Brookfield Asset Management and Singapore's sovereign wealth fund. It played a part in nearly all of the major asset disposals by the state-owned energy firm.

Adnoc, which pumps almost all the oil in the United Arab Emirates, Opec's third-biggest producer, has sold shares in its fuel-retail arm and leasing rights for properties and natural-gas pipelines.

'KEN OF ARABIA'

Many bankers said this was a quicker way of raising cash than Aramco's initial public offering (IPO) in December 2019, which raised almost US$30 billion for the kingdom but took around two years to complete.

While the Dhahran-based firm issued US$8 billion of bonds last month, its executives have said they want to lower the company's leverage following its US$69 billion acquisition of chemical marker Saudi Basic Industries this year.

The energy firm has lined up banks including JPMorgan Chase & Co to help with a stake sale in the pipeline business, Bloomberg News reported in April.

Moelis was among the banks that arranged Aramco's IPO. Its founder, Ken Moelis, has extensive experience of deal-making in the region and has the nickname "Ken of Arabia".

BLOOMBERG