The World’s Biggest Oil Producer is planning to raise somewhere between $17 Bn – $20 Bn by selling a minority stake in its gas pipelines. Saudi Aramco sold stake in oil pipelines recently helping it to raise close to $12.4 Billion.
Saudi Aramaco has tapped JPMorgan and Goldman Sachs to advise on the stake sale and bring in potential buyers. Currently, reports suggest that potential bidders range from China, South Korea, and North America.
The Deal Size
State-backed funds in China have shown interest in the deal along with few private equity players based in North America. The formal sale process has not yet begun. Saudi Aramco is approaching potential buyers as of now.
According to sources from Reuters, the deal can reach the upper end of the range raising $20 Bn. Another sources suggests that $3.5 billion of equity will be used and the remainder of the deal will be funded by bank debt.
Gas Consumption And Demand
The Kingdom of Saudi Arabia is the world’s sixth largest market for gas and domestic consumption and demand for gas is expected to skyrocket as Vision 2030 of KSA is well-underway.
Under the Vision 2030, many industries and activities will shift from oil to gas. “The gas deal is about the long-term view of gas utilization and consumption in Saudi Arabia,” said one source familiar with the matter.
Who Are The Potential Buyers?
Other bidders that have been approached are Global Infrastructure Partners (GIP), Brookfield, Singapore sovereign wealth fund GIC and European gas infrastructure owner SNAM.
China’s Silk Road, Chinese state-backed investment fund CNIC Corp, South Korea’s sovereign wealth fund Korean Investment Corp (KIC) and NH Investment & Securities will also be likely involved in the bidding war when the formal sale process begins.
Second Quarter Results Of Saudi Aramco
With a solid recovery in Crude oil prices after the coronavirus crash, the top line and bottom line of energy companies like Aramco have seen a major glow up.
Saudi Aramco reported a 288% surge in its bottom line (net income) to $25.5 Billion in second quarter.
The rest of the year is also expected to perform on similar grounds with no slow down in sight, according to analysts.