Major Chinese investors in talks to acquire stake in Saudi Aramco

FILE PHOTO: Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference (MOES 2017) in Manama, Bahrain, March 7, 2017. REUTERS/Hamad I Mohammed

Major Chinese investors are in talks to buy a stake in Saudi Aramco, several sources told Reuters on Wednesday, as Saudi Arabia’s state oil firm prepares to sell another slice of its business to international investors.

Saudi Arabia was in discussions to sell 1% of Aramco to a leading global energy company and could sell further shares including to international investors within the next year or two, Crown Prince Mohammed bin Salman said in televised remarks on Tuesday.

A stake of 1% would equate to around $19 billion based on Aramco’s current market capitalisation.

Sovereign wealth fund China Investment Corporation (CIC) was among those that could invest, two sources told Reuters.

Aramco was talking to CIC, as well as Chinese national oil companies, said one of the sources close to CIC. None of the Chinese companies could be reached immediately for comment.

Aramco had been in touch with Chinese investors for a few years and CIC is the most likely investor, said the second source with a state-backed private equity fund.

“The kingdom does have close relations with China,” said a third source, who is close to Aramco. “The major shareholder will decide what to do with their shares.”

Saudi Arabia, the world’s biggest oil exporter, retained its position as China’s biggest crude oil supplier for a seventh consecutive month in March.

Another source said before the COVID-19 pandemic, Aramco had toured around China looking for investors, talking to all the major state investors with overseas money, but few were interested. CIC and China’s Silk Road Fund were also among the firms they approached.

Aramco, the world’s biggest oil company, listed on the Saudi bourse in late 2019, raising $25.6 billion in the IPO and later sold more shares under a “greenshoe option” to raise the total to $29.4 billion.

“There are talks now for the acquisition of a 1% stake by a leading global energy company in an important deal that would boost Aramco’s sales in … a major country,” Prince Mohammed said, without elaborating.

“There are talks with other companies for different stakes, and part of Aramco’s shares could be transferred to the (Saudi) Public Investment Fund and a part listed … on the Saudi bourse,” he said in an interview aired by Saudi TV marking the fifth anniversary of Vision 2030.

The 2019 Aramco IPO was seen as a pillar of the economic diversification programme aimed at attracting foreign investment.

Prince Mohammed said in the interview that Riyadh was strengthening its relationships with China, India and Russia, though the United States remained a strategic partner despite some differences with the Biden administration, which has taken a tougher stance on Saudi Arabia.

“China has said Saudi Arabia is a strategic partner, India has said Saudi Arabia is a strategic partner and Russia has also said Saudi Arabia is a strategic partner,” the prince said.

Friction between China and the United States has flared in recent months on a range of issues, including Taiwan and Beijing’s use of forced labour in its northwestern Xinjiang province, home to the Muslim Uighur minority.

Reuters

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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.