Saudi Aramco’s move to acquire Saudi Public Investment Fund's 70 percent stake in SABIC for an estimated $70 billion is a “smart move,” said Henry Fernandez, the CEO and chairman of global index compiler MSCI Inc.
The acquisition is seen to benefit Aramco in two ways: it will gain control of a petrochemical company, in addition to its own oil and gas operations and will allow it to market more petrochemical products downstream, Fernandez said in an exclusive interview with Argaam in Riyadh.
“Financially, it is a smart move as well as at the end of it all the capital that is raised by Aramco ends up in the form of cash in the PIF, the Kingdom’s sovereign wealth fund, to be reinvested in the development of the country, which was the original objective of the [Aramco] IPO,” he explained.
Saudi Arabia has plans to float a 5 percent stake in Aramco to raise $100 billion which will value it at $2 trillion.
Last month, Khalid Al-Falih, Minister of Energy and board chairman of Saudi Aramco, denied media reports that the world's largest oil producer plans to scrap its IPO plans.
Fernandez said that such media speculations will not have any negative impact on overall investor sentiment in the upcoming IPO.
“I think most people are focused on Saudi Arabia because of its own intrinsic values, its own companies and the development of the market. But, if there were to be an Aramco IPO, it will make the market more attractive and more successful.”
Write to Reem Abdellatif at reem.a@argaam.com
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