Abu Dhabi plans at least $1bn investment in Aramco IPO: Sources

The Abu Dhabi Investment Authority (ADIA) is considering an investment of at least $1bn in the initial public offering (IPO) of Saudi Aramco, which is relying mainly on Saudi Arabian and Gulf investors to raise up to $25.6bn, according to multiple sources with knowledge of the matter.

A final decision on the amount has yet to be taken and would need approval from the board of directors of the United Arab Emirates‘ state-owned fund, one of the sources told the Reuters news agency.

ADIA, estimated to have assets of nearly $700bn, is chaired by the president of the UAE, Sheikh Khalifa bin Zayed Al Nahyan, while its deputy chairman is Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan.

An ADIA spokesman and Aramco declined to comment in response to requests from Reuters. The Abu Dhabi government’s media office did not immediately respond to requests for comment by Bloomberg.

Two of the sources told Reuters that ADIA was considering an investment of at least $1bn, while two other sources gave a range of between $1.5bn to $2bn. An order of about $1.5bn would mean Aramco’s institutional offering is almost certainly fully covered.

Abu Dhabi could invest in the share sale via one or more state-linked entities, Bloomberg reported, citing sources close to the matter.

Saudi Crown Prince Mohammed bin Salman (MBS), who has made the record share sale a centrepiece of his plan to modernise his country’s economy, will make an official visit to Abu Dhabi on Wednesday, according to Saudi TV station Al-Arabiya.

State oil giant Aramco has struggled to attract a cornerstone or anchor investor for its IPO, which could be potentially the world’s biggest. It has also approached the Kuwait Investment Authority (KIA) and Singapore’s GIC.

It had cancelled marketing roadshows for its listing outside the Gulf region on lack of interest from foreign institutional investors, many of whom see Aramco’s valuation as expensive given concerns over political, governance and environment issues.

Saudi Arabia aims to sell 1.5 percent of Aramco in the deal, valuing the company at between $1.6 trillion and $1.7 trillion – lower than the $2 trillion target initially sought by MBS, who has made the offering a pillar of his ambitious economic diversification drive.

Only one percent is earmarked for institutional investors and the rest for Saudi retail buyers.