Saudis Threaten To Move Aramco IPO Elsewhere Due To "Concerns" Over Trump, Sept 11 Law

Tyler Durden's picture

Aside from Hillary Clinton of course, the single biggest loser from the November 8 presidential election in terms of net sunk costs, was Saudi Arabia: having "donated" tens of millions to the Clinton Foundation, and sponsored her presidential campaign directly, Riyadh was hoping for many long and fruitful years of quid pro quo in exchange for its recycled petrodollar generosity. Instead, the Saudis got not only president Trump, who has made it public he wants a clean break with a US foreign policy which panders to such Mid-east "allies" as the Saudi, but also the recent passage of legislation that could - and already has - allowed U.S. terror victims to sue Saudi Arabia.

As a result, a suddenly snubbed Saudi Arabia, is reassessing its multibillion-dollar U.S. financial strategy because of shifts in the American political landscape, including whether to go elsewhere with the public stock debut of its state oil company the WSJ reports.

In monetary terms, this means that Saudi Arabia’s giant sovereign-wealth fund has paused its U.S. investments until they can figure out the implications of the bill and the new direction of the White House, the WSJ said citing a person familiar with the fund’s decision making.

And, in what is an attempt to engage in a negotiation with the Trump administration, Saudi Arabia has already unveiled what it will use as a bargaining chip to make Trump warm up to Suadi diplomatic overtures: the initial public offering of Saudi Arabian Oil Company, the world’s biggest oil producer better known as Aramco, which is tentatively set for next year or 2018, and could raise more than $100 billion in proceeds, ranking as the largest in IPO history. The prospect has set banks scrambling for a deal that could bring $1 billion in fees.


Aramco, the world’s biggest oil producer, tentatively set its IPO for next year or 2018

It is these fees that Saudi Arabia is now threatening with taking to some other global capital market.

While Saudi officials haven’t decided where to list the shares, bankers say the New York Stock Exchange is the best place to debut such a large offering. The government has been meeting with officials from numerous exchanges, including London, people familiar with the process said.

Furthermore, with its "investment" in the Clinton Campaign now lost, Saudi officials are looking at other avenue with which to grease Washington, and specifically how they will invest money from the kingdom’s massive Public Investment Fund. Danging the carrot, Saudi officials have indicated they are effectively turning the sovereign-wealth fund into a war chest for non-oil investments abroad—a coffer that would expand with proceeds from the Aramco IPO.

So what has gotten the Saudis so riled up?  It appears that the kingdom is particularly alarmed by the federal legislation approved in September to allow victims of the Sept. 11, 2001, terrorist attacks to sue Saudi Arabia to seek damages.  The prospect of being found liable for the attacks has made Saudi leaders worry that big transactions in the U.S. could expose their assets to legal judgments.

Which, traditionally, would have a simple solution: just give the Clinton Foundation an extra million and it 3will go away. This time however, with Trump in charge, the Saudis have no idea how to approach the US government when it comes to "purchasing" political favors.

And while it grapples to find the right approach, Saudi Arabia had beefed up its lobbying operation to wage a furious effort to defeat the terrorism legislation. After Congress overrode a veto of the bill by President Barack Obama , lobbyists for Saudi Arabia pressed lawmakers to amend it. Lobbyists have argued that the measure is too broad and could have the unintended result of prompting lawsuits against the U.S. by foreign individuals. 

Those lobbyists also had raised the specter that the law could affect Saudi Arabia’s U.S. investment plans.

A shift in Saudi Arabia’s U.S. investing strategy now could become a negotiating point in the kingdom’s broader relationship with the U.S. Many in Washington expected legislators to soften the law after the November elections, something Senate Majority Leader Mitch McConnell (R., Ky) hinted at in September. At that time, former Secretary of State Hillary Clinton was forecast to win the election. The White House declined to comment. But congressional leaders haven’t revisited the law since Mr. Trump’s victory, and have now adjourned until next year, likely leaving the law to the next Congress and a president who has indicated no interest in changing it.

The biggest problem for the Saudis is that Trump has been a fervent supporter of the bill. He called Obama’s veto attempt shameful and said it would “go down as one of the low points of his presidency.”

In a statement before Congress voted to overturn the veto, Mr. Trump said: “If elected president, I would sign such legislation should it reach my desk.” Mr. Trump didn’t respond to requests for comment.

Also, there was the infamous spat between Trump and Saudi prince Bin Talal...

Then again, it may be just one of things Trump is preparing to flip-flop on. The President-elect has said he is a friend of Saudi Arabia, and picked Gen. James Mattis, a longtime supporter of Saudi Arabia, as his defense secretary.

Yet Trump has also questioned U.S. military support to the country. In another potential challenge to Saudi Arabia, Mr. Trump has been an advocate for increasing U.S. oil production, in part to limit imports.

Saudi companies have stakes in U.S. refineries and are trying to expand into petrochemicals. But Trump adviser Harold Hamm, the chief executive of oil producer Continental Resources Inc., said recently that Saudi Arabia shouldn’t be allowed to own petrochemical plants in the U.S., since it would collide with U.S. business interests by having the plants process Saudi oil, rather than buying from U.S. producers.

* * *

Bit the real carrot is the Aramco IPO. While a Saudi Aramco IPO in New York was never a certainty, many had assumed it would take place there. However, the changes in the U.S. have further delayed Saudi decisions on how to move ahead with their plans. The offering is part of a Saudi strategy to reduce its reliance on oil and diversify its economy. The IPO is also the primary impetus behind Saudi Arabia's change of heart, where the kingdom is now pushing for higher prices and lower production, a U-turn from its November 2014 stance. After all the probability of finding $100 billion worth of investments is much higher with oil at $60 than $30.

In July, the Saudi fund said it would invest $45 billion in a fund run by Japanese internet and telecommunications giant SoftBank Group Corp.  The WSJ sources say the Saudi officials decided to make the huge investment in SoftBank after the terrorism legislation, and the money that went into SoftBank could have gone directly into U.S. investments or U.S. investment firms. There were concerns about their exposure if they invested directly, one person said. Naturally, one can counter that they would have nothing to be concerned about if they are - as they claim - fully innocent of anything to do with Sept 11.

The Saudi fund was also interested in SoftBank on its own merits, said a person familiar with the matter, including the ability to put a large amount of money to work with a single investment and the likelihood that the fund would have access to deals from some of the world’s top entrepreneurs.

Of course, the investment had an ulterior motive too: to get Trump on the same page as the Kingdom. Some of the money that went to SoftBank appears likely to end up in the U.S. via SoftBank investments. SoftBank Chief Executive Masayoshi Son met with Mr. Trump at Trump Tower in New York on Dec. 6 and told reporters afterward he would invest $50 billion—some of it from the fund the Saudis backed—in the U.S. and create 50,000 new jobs.

So yes, much of the money invested in the US via SoftBank will come from Saudi Arabia, just as the Saudis want it, as from that moment on they would have leverage... just like they did over Clinton.

It remains to be seen just what Trump's policy toward Saudi Arabia will be, and if he will merely perpetuate the flawed foreign policy of his predecessor.

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AllTimeWhys's picture

Good-fucking-riddance

Looney's picture

 

The Saudi Royal Family should be rounded up and FedEx’ed to Antarctica.

Those inbreds all look like the Emperor Penguins anyway.   ;-)

Looney

jcaz's picture

Fine.  Go.  Try the Vancouver exchange- they're used to fucks like you.......

evoila's picture

why don't you IPO on the Damascas exchange and get your ass handed to you again. 

jcaz's picture

Bin Talal has pissed more money away in stocks than Gartman-  it's amazing the family hasn't had him killed yet.......

They're only IPO'ing to get out at the top- fuck em.

Manthong's picture

Don’t let the camel stick his nose up your dress on the way out.

mkkby's picture

Here is how you handle the KSA.  Withdraw the 35k US troops guaranteeing they stay in power. 

Watch as the goat fuckers get beheaded by their own people/neighbors.  Not a friend in the world and surrounded by enemies.  (Sort of like a certain jewish state nearby.)  This will take about a month.

yttirum's picture

Goat fuckers would fit right in over there. Canada passes law to legalize beastiality.

http://www.independent.co.uk/news/world/americas/bestiality-legal-canada...

KnuckleDragger-X's picture

IPO in China since they are pure, honest players in the world market.....

Urban Redneck's picture

The exchange fees are negligible compared to the underwriters' fees, and the underwriters are basically the same (JPM, GS, et al) regardless of the jurisdiction of the exchange itself.  Prince Camel Jockey should really know this, after the billions he piled into ShitiBank... but perhaps he's always delegated reading their annual reports to someone more astute.   

fauxhammer's picture

It's getting hard to keep up with all of the new styles in headwear these days

abyssinian's picture

Get the fuck out of here camel bangers! and take your smelly checker flag towelhead with you, go pound some sands!

VladLenin's picture

Fine. Don't let the door hit you in your 6th century ass...goat fuckers.

BorisTheBlade's picture

They were aiming at 2 trillion valuation, roughly equals to Chinese foreign reserves. These two can find something akin to common interest.

NoWayJose's picture

Do it! Please! You will hurt yourself and the New York bankers!

FrankieGoesToHollywood's picture

That is good news.  There is no way in hell I would invest.  But more importantly, if it is listed somewhere else, it will make it more difficult to be part of an index fund which would result in many unsuspecting investors pumping money into it.

buzzsaw99's picture

+1 they were planning to sell that crap to every pension fund in america.

the value of my shit changes with the price of oil but not them oh no. they just claim their shit is worth ten trillion dollars and that is that.

buzzsaw99's picture

two words: go fuck yourselves.

orangegeek's picture

LMFAO!!!

 

NYSE/NASDAQ are the two largest exchanges.

 

Go list in Europe - enjoy the fees.

 

And when Trump opens up Alaska, takes over Iran's production, Saudis will be returning to herding goats.

buzzsaw99's picture

better yet, ipo in china. the yuan is really hot and their speculators will buy anything.

Herdee's picture

The Wahhabi terrorists sponsored by Saudi Arabia gave money to Hillary. They are behind 911. None of these crooks know no limit to their corrupt actions. Hussein Obama is the one taking expensive gifts from these bastards and John McCain is the one who meets with Saudi paid-off extremists which work on behalf of Obama/Hillary.

buzzsaw99's picture

mccain sucks saudi cock.

gregga777's picture

There will never be an ARAMCO IPO. Because:

1) The KSA (Kingdom of Saudi Arabia) oil sheiks would have to reveal too much secret technical data about their true oil reserves and the true condition of their reservoirs, especially the water-to-oil cut;
2) Who would be stupid enough to buy shares in a conporation that had already been nationalized once, that is stolen, from its previous owners?

Hmm, now that I think about it, number 2 probably doesn't apply. There are always people stupid enough to throw away other people's money on a sh**ty deal like ARAMCO stock. They'll just the investors whose money has been lost that, "No one could have foreseen that Saudi Arabia would re-nationalize ARAMCO." Laughing my a** off.

FrankieGoesToHollywood's picture

I thought that too.  But there are more lies on the balance sheet of the DOW components than what KSA could even dream about.

ToSoft4Truth's picture

KSA will lie like everyone else. 

Vegetius's picture

No one knows the real worth of Aramco, but it is a pig in a poke. The Saudis are running out of road and the ending will be bloody indeed

insanelysane's picture

And go sell your oil somewhere else too.

Never One Roach's picture

Never happen because others wont put up with their shit like NYJ's do. Plus, SA may not even be aournd much longer. It's just as easy for The Donald to invade SA on some fake pretense like Hillary and Obama did to Libya and Syria. Many many Muslims abhore the Saudis so Trump will have lots of support. Most Muslims I know here hate the Saudis so i doubt he'll have much of a problem except from the usual Fake news companies like nyt, cnn, wapo, npr, etc

King Tut's picture
King Tut (not verified) Never One Roach Dec 16, 2016 2:42 PM

New York Jets?

Green2Delta's picture

Up yours, sand nigger! 

small axe's picture

list on Yemen Exchange, assuming it still exists after your war criminal assault that has basically destroyed the country.

isn't that the way it's done, first you profit from destroying a country, then you profit from rebuilding it?

a special kind of hell in any religion for fucks like the Saudis

DirtySanchez's picture

IPO my ass.

The war hero, McCain, his mouthy bitch, Lindsey, and the Bush family believe those are their oilfields.

 

Chippewa Partners's picture

Have they heard of a Dutch auction?   Worked dam good for Google............

libfrog88's picture

Would not touch Aramco stock with a 10 foot pole. The big losers will be the syndicate banks if the issue is made elswhere, so who cares?

PoasterToaster's picture
PoasterToaster (not verified) Dec 16, 2016 2:17 PM

Move it all the way into Hell where you monsters belong.

GlassHouse101's picture

Petrodollar will be the next shoe to drop

Sokhmate's picture

MOVE IT TO RUSSIA

Disgruntled Goat's picture

SO FUCKING WHAT! SO GOLDMAN LOSES OUT ON SOME FEES? WHO GIVES A FUCK, FUCKING DUNE-COONS....

Banker Buster's picture

Ok do it saudi..  thanks bye and don't bother sending a card.

esum's picture

Aramco ... whose wells are flooding with salt water...

 

 

----_-'s picture
----_- (not verified) Dec 16, 2016 2:53 PM

its time to replace the saudis.  ive kept telling that since a while now and i think we should get rid of them.

 

OPEN SAUID ARABIA TO DEMOCRACY!!!

OIL IS NOT YOURS. IT BELONGS TO ALL PEOPLE AROUND THE GLOBE AND WE WILL SARE IT PROPERLY.

 

DROWN SAUDI ARABIA

 

Mena Arkansas's picture

So what?

Less fees for the jews at Goldman Sachs.

Sounds like a win to me.

voxale's picture

Big fucking deal. Like the Chinee, these pieces of crap need us more than we need them.  Now there's an idea.  Saudis can stiff the Chinee with this overpriced Aramco dogshit deal. Perfect bedfellows. 

.300WinMag's picture

Sit and spin, sandman.

just the tip's picture

fuck.  ZH what is the clickbait photo?  i'm assuming it is ivanka, the dopey prince, and trump?  why no include clickbait photo in article, boris wonder?

ParticularlyStupidHumanoid's picture

ZH has always been anti-Trump, etc. A bad apple, ZH. Beware. As Alex Jones has pointed out, we will find out people we thought were our enemies are our friends, and people we thought were our friends are our enemies. ZH is of the latter sort.

SchlitzTallboy's picture

List it on TASE, since they did 9/11.

Larry Silverstein can ring the bell

Ding ding ding ding ding!!!!!!!!!!!