China said to mull buying up to $10b stake in Aramco IPO

Attendees walk by a sign for the Saudi Arabian Oil Co. (Aramco) on display inside the King Abdulaziz Center for World Culture during a tour of the project in Dhahran, Saudi Arabia, on Friday, Nov. 25, 2016. Photographer: Simon Dawson/Bloomberg

Chinese state-owned entities are in talks about investing a combined $5 billion to $10 billion in Aramco’s initial public offering, as Saudi Arabia seeks commitments from friendly governments to shore up the record share sale, people with knowledge of the matter said.

The Beijing-based Silk Road Fund is among parties that have been in discussions to buy stock in the offering, according to the people, who asked not to be identified because the information is private. Some other Chinese funds or state-owned enterprises may also join, the people said.

President Xi Jinping has been seeking to increase China’s political clout and revive ancient trading routes under his “One Belt, One Road” initiative. An investment in Aramco would cement ties with Saudi Arabia as well as provide China a way to profit from rising oil prices.

State-owned oil producer Sinopec Group and sovereign wealth fund China Investment Corp. have also held talks in recent months about investing in the Aramco IPO, the people said. Commitments haven’t been finalized, and the lineup of investors and the amounts each firm puts in will ultimately depend on the Chinese government, the people said.

The Silk Road Fund was set up in 2014 with $40 billion of initial capital. It was later supplemented with another 100 billion yuan ($14 billion) of funds, according to its website.

Large commitments from China would help Aramco make the share sale a success after Western money managers pushed back earlier on the company’s valuation. Saudi Crown Prince Mohammed Bin Salman has long insisted the state oil company is worth $2 trillion, although he’s prepared to scale back his expectations to between $1.6 trillion and $1.8 trillion, Bloomberg News has reported.

Aramco declined to comment. Representatives for the Silk Road Fund and CIC, as well as Sinopec Group and its main listed unit, didn’t reply to requests for comment. China’s State-owned Assets Supervision and Administration Commission, which oversees the biggest government enterprises, and the finance ministry didn’t respond to faxed queries.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.