Aramco announced 17 Memoranda of Understanding with U.S. investment giants yesterday off the back of Mohammed bin Salman’s visit to the White House this week.
Building Off U.S.-Saudi Business Relations
These Memoranda build on previous agreements announced in May between Saudi and U.S. public-private partnerships.
Earlier this year, U.S. and Saudi firms signed a separate Memoranda in the first stage of a nine-decade relationship between both business communities.
Potential Scale of Agreements
The $30bn figure covers all 17 deals.
Saudi Aramco sources failed to disclose the specific break-down of those agreements signed by its asset arm, Wisayah, in the announcement.
The wording of the release suggests that Wisayah may be appointing these U.S. private equity firms for investment mandates or consultancy on Aramco’s global investment portfolio.
Aramco’s investment portfolio has grown exponentially since 2018, in a restructuring that formed the Wisayah pension fund, before the release of the Kingdom’s IPO.
Timing is No Coincidence
Diversification continues at pace amidst a slump on oil and NEOM’s public rollback.
Brent crude futures fell 93%, or 1.5%, to $62.45 a barrel this morning, whilst the U.S. West Texas Intermediate was down 1.7% at $58.02 a barrel.
Investors remain cautious about the value of oil in the market because of excess supply and the possibility of a peace deal in Ukraine.
The recent change in NEOM’s leadership also suggests a proactive effort by the Saudi leadership to leverage liquidity for careful corporate governance and high-yield assets.
Saudi investors will be looking to prioritise corporate governance to avoid future consultancy failings. This week’s announcements should be read as a dialling up of the Kingdom’s course correction amidst challenging internal and external headwinds.
Stay Up to Date with Finance Middle East!
Aramco Seals $11 Billion Deal with BlackRock-led Consortium for Jafurah Midstream Rights
Saudi Arabia Seeks to Become Global Hub for Artificial Intelligence, Says PIF Governor
Saudi Arabia’s Future Investment Initiative Generates $50 Billion in Deals
