This article was published by The McAlvany Intelligence Advisor on Monday, November 18, 2019:
Even before becoming the crown prince, Mohammed bin Salman (MBS) had big dreams. If he could raise $100 billion, he might be able, if he moved swiftly enough, to keep his kingdom from becoming irrelevant.
He posited the idea in 2016: sell five percent of the government’s only asset – Aramco, officially the Saudi Arabian Oil Company – to unsuspecting investors who think that it’s worth $2 trillion. In 2018, he began to draw up plans to redirect the country’s total dependence upon oil revenues towards real estate development, tourist destinations, industrial parks, improved transportation, and other infrastructure improvements. He called it his “Vision 2030.”
His path became twisted, slowing the initial offering of shares. He met resistance from inside the kingdom, so he had to do some housecleaning. There was the murder and dismemberment of Washington Post journalist Jamal Khashoggi last October, which MBS denied any knowledge of, but which forced Fitch Ratings to downgrade the government’s credit rating. And then there were the attacks on the company’s oil fields in September, letting all the world see just how vulnerable those facilities are in a highly volatile and explosive Middle East.
Nevertheless, Aramco, MBS’s “crown jewel” announced on Sunday that it is only offering 1.5% of itself for sale in December, at a price far less than MBS had hoped for. And if things don’t meet even those minimum, now greatly reduced expectations, he could pull the offering altogether before it goes public in December.
Analysts looking through the 600-page prospectus that was released last week on the deal aren’t impressed,
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