As stated by the head of Department investbanka division Citigroup in the middle East Omar Iqtidar to Bloomberg, the plan of transformation of the Saudi economy and its withdrawal from oil dependence can bring investment banks “fantastic income”. According to Iqtidar, we witness how skeptical investors are starting to believe in the successful restructuring of the Saudi economy.
As noted by Iktidar, now the market of mergers and acquisitions in the middle East does not look very active, bearing in mind the already announced transactions, but the market potential is very high. Citigroup expert said that Saudi Arabia, Kuwait and Egypt represent the most promising opportunities for investment. Noted especially from sectors such as oil refining, petrochemicals, health care and consumer products.
In April 2016 the son of the Saudi king Salman, Prince Mohammed bin Salman, announced the ambitious reforms, which aim at the transformation of the economy and its withdrawal from oil dependence. As a result of the reforms, as stated by Ben Salman, Saudi Arabia by 2020 “will be able to live without oil”. Among the planned measures — the IPO the world’s largest oil company, Saudi Aramco the state. The government plans to sell 5% stake in the company on the Saudi stock exchange Tadawul in 2017 or 2018. As reported in April, Bloomberg informed sources, the main consultants for the IPO Saudi Aramco will be the investment Bank JPMorgan Chase & Co., as well as a former employee of Citigroup Michael Klein.
The remaining 95% of Saudi Aramco will be at the disposal of the sovereign investment Fund Public Investment Fund, which the Saudi authorities plan to make the largest Fund in the world, bringing together the assets of $2 trillion.
In the framework of the transformation of the economy (the relevant Saudi authorities plan called “Vision 2030” it is planned to abolish subsidies for the population (for example, subsidies for gasoline and electricity), as well as to introduce additional taxes (luxury and VAT). Within 5 years the country will be introduced a Green Card system, which will allow the Arabs and Muslims from other countries for a long time to live and work in Saudi territory. The size of the Saudi stock market Tadawul is expected to increase by two times, simplifying access to it to foreign companies and making public dozens of Saudi companies.