Wednesday 27 November 2019 12:49 pm

Abu Dhabi and Kuwait funds plan investment in Saudi Aramco IPO

The national investment bodies of Abu Dhabi and Kuwait are planning investments in Saudi Aramco’s upcoming initial public offering (IPO).

Multiple sources told Reuters that the Abu Dhabi Investment Authority (Adia) is taking a stake worth at least $1bn (£780m). Any final decision on the size of the investment will need board approval.

Read more: Saudi Aramco bets on local demand as it cancels European IPO roadshow

Two of the sources said Adia was considering an investment of at least $1bn, while two others gave a range of between $1.5bn and $2bn.

The Kuwait Investment Authority (Kia) is also preparing to invest, although the size of any potential stake is not known at this point.

Aramco officials have visited Kuwait and Abu Dhabi, which have strong political ties with Riyadh, to discuss participating in the offering.

According to the Sovereign Wealth Fund institute, the two bodies manage a cumulative total of around $1.3 trillion in assets, making them two of the world’s largest sovereign wealth funds.

Adia, which has an estimated worth of nearly $700bn, is chaired by the president of the UAE.

Its deputy chairman is Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed al-Nahyan, a close ally of Saudi Arabia’s crown prince Mohammed bin Salman.

The investments are crucial for Aramco, which cancelled investor roadshows for the listing outside of the Gulf due foreign investor concerns over political and environmental issues.

Earlier this month the company announced that it would sell 1.5 per cent of its shares, valuing the company between $1.6 and $1.7 trillion.

Although lower than the $2 trillion valuation originally targeted by bin Salman, such a sale would still be worth at least $25bn, making it the largest IPO of all time.

Read more: Saudi Aramco set for $1.7 trillion valuation

On Tuesday Samba Capital said that retail subscriptions had reached 27bn Saudi Riyals (£5.6bn). Aramco has said that it expects retails investors, who have until Thursday to sign up, to cover at least a third of the sale.

Rania Nashar, Samba Capital’s deputy chairman, said that “the level of demand witnessed during the IPO is a strong indicator of the trust that the investing community has in the strength of the company’s financial position.”

The institutional offering closes a week later on 4 December.

Aramco declined to comment.