Good morning, wonderful people. We have a nice, compact issue for you this morning with Aramco’s blockbuster share sale and word the PIF wants to raise GBP-denominated debt leading the headlines.

HAPPENING TODAY-

#1- “Top executives” from Aramco will be in London and the US for a roadshow to drum up foreign investor interest in the oil giant’s USD 12 bn secondary share sale, Bloomberg reports, citing sources it says are familiar with the matter. Aramco CEO Amin Nasser is expected to be at “at least one of the events in London this week” and CFO Ziad Al Murshed will also attend the London leg of the roadshow. A “separate” roadshow is slated to take place in the US, Bloomberg reports, without providing further information on the exact location or timeline for the US events.

The sale got off to a strong start earlier this week, with the blockbuster follow-on offering fully covered “hours” after kicking off on Sunday. Both local and foreign investors subscribed to the offering. Aramco had set a price range of SAR 26.70-29.09, meaning the Kingdom’s treasury could see an inflow of as much as SAR 43.5 bn if pricing closes at the top of the range.

Institutional book-building continues through Thursday, while the three-day subscription period for retail investors began yesterday and closes tomorrow.

ADVISORS- SNB Capital is lead manager. HSBC, BofA, Citi, Goldman Sachs, JP Morgan, Morgan Stanley, Meryll Lynch, and SNB Capital will act as joint global coordinators, bookrunners and financial advisors. Our friends at EFG Hermes KSA will act as domestic bookrunners alongside Al Rajhi Capital, Riyad Capital, and Saudi Fransi Capital. Meanwhile, M. Klein and Company and Moelis will act as independent financial advisors. Meryll Lynch will act as the stabilization manager. White & Case is legal counsel to Aramco, while PwC is auditor. Receiving agents include, Alinma Bank, Alrajhi Banking and Investment Corporation, Arab National Bank, Banque Saudi Fransi, Riyad Bank, Saudi Awwal Bank, Saudi National Bank.

#2- Where do things stand on the Saudi-US defense pact? A “historic” bilateral agreement between Riyadh and Washington is still in the works as officials continue negotiating the terms, US Ambassador to Saudi Arabia Michael Ratney said in an interview with Arab News. The timeline on the pact — which US Secretary of State Antony Blinken said last month could be “weeks away” from finalizing — remains unclear, with several moving parts, Ratney said. In addition to securing Israel’s OK on a two-state solution with Palestine as a precondition for the agreement, a pact would also need clearance from the US Senate, the ambassador noted.

REFRESHER- The agreement would see Washington provide security assurances to Riyadh, along with cooperation on the development of a domestic nuclear power industry, as well as on artificial intelligence and other technologies.

HAPPENING THIS WEEK-

IPO WATCH- Trading of shares in Fakeeh Care Group will begin on Tadawul’s main market tomorrow, according to a Tadawul announcement. Shares will be allowed to trade within a ±30% band on each of the first three days before being capped at no more than 10% up or down after that before circuit breakers kick in. (All shares on Tadawul are subject to the 10% up-or-down rule.)

REMEMBER- Fakeeh Care’s IPO drew in strong demand, with the institutional tranche of the offering closing 119x oversubscribed, while the retail tranche was 14.5x oversubscribed. Abu Dhabi Investment Authority (Adia), the UAE’s largest sovereign wealth fund, and Olayan Saudi Investment are both cornerstone investors in the IPO. The Riyadh-based healthcare provider is taking a 21.5% stake to market through an offering of both new and existing shares. The IPO was priced at the top of the range at SAR 57.5 per share, setting it up to be the largest IPO so far this year with SAR 2.9 bn in proceeds.

Saudi and the UN Environment Program are hosting this year’s World Environment Day tomorrow with a focus on land restoration, desertification and drought resilience. The event is the largest global platform for environmental outreach gathering people from over 150 countries. You can register for the event here.

The #Growth Summit is set to kick off tomorrow, bringing together marketing, product and growth experts at the InterContinental in Riyadh. You can request your invite here.

PSAs-

Markets will be closed for Eid week: The Tadawul will be closed to trading after the closing bell on Thursday, 13 June and will reopen on Sunday, 23 June in observance of Eid Al Adha, the exchange said in a post on X.

WATCH THIS SPACE-

#1- More (Nomu) IPOs incoming: The Capital Market Authority (CMA) approved two companies’ plans to IPO yesterday. Both companies — Almajed for Oud and Tharwah HR — have yet to release their prospectuses.

• Tharwah HR has received clearance to sell a 15% stake on Nomu, representing 706k shares, according to a separate statement from the authority.
• Almajed For Oud has also been cleared to IPO a 30% stake in the company, representing 7.5 mn shares, according to a CMA statement. The CMA did not make clear whether this is main market or Nomu offering, but we believe it is the latter.

REMEMBER- Companies have six months to pull the trigger on their IPOs after getting CMA approval, after which time the approval expires if the offering and listing are not complete.

#2- An unnamed Kuwaiti bank could be buying a major stake in a Tadawul-listed bank in a transaction that could be worth as much as USD 1.7 bn, Al Rai reports, citing unnamed sources. Talks are at an advanced stage, with the exact size of the acquisition — which could be as much as 50% of the bank — still being discussed. The Kuwaiti bank is currently working on due diligence, the sources said, without providing further details on either bank or the projected timeline for the acquisition.

#3- Saudi will be home to 100 new funds within the next two years, Investment Minister Khalid Al Falih said at the Saudi-Brazilian Financial Sector Roundtable yesterday, reports Aleqtisadiah. Al Falih did not provide any further details or information, but we believe the minister is talking about the number of new funds he sees being set up, not the number of new asset managers that will set up here.

#4- More localization contracts will need to run through the Qiwa platform: Contracts related to localizing operations and maintenance for large businesses in which the government holds at least a 51% stake are now required to be documented on e-platform Qiwa, as the Human Resources and Social Development Ministry rolled out the second phase of its e-documenting plan for businesses, according to a statement. The decision includes contracts for services including maintenance, catering, IT, and others. The third and final phase of the plan, which begins on 1 December, will introduce the requirement to all other businesses.

DATA POINTS-

#1- The fruit of the regional headquarters program: A total of 127 firms set up regional headquarters in Saudi Arabia in 1Q 2024, marking a 477% y-o-y jump, according to the Investment Ministry’s 1Q 2024 Economic and Investment Monitor. The report attributes the increase to new tax incentives and exemptions introduced for multinationals, as well as the ministry addressing some 34 legislative and procedural disputes from investors.

ICYMI- Earlier this year, the government rolled out tax incentives for foreign companies that relocate their regional headquarters to the Kingdom. The incentives are part of a plan that is a cornerstone of Crown Prince and Prime Minister Mohammed bin Salman’s drive to build a diversified, globally significant non-oil economy, and has been in the works since February 2021.

THE LATEST TO JOIN THE PARTY- US-based data management player Denodo is setting up its regional HQ in Saudi, the company said in a statement. “This new office will enable us to better serve our customers in the Middle East, providing them with our 'fearless data' approach to logical data management and the cutting-edge solutions they need to stay ahead in today's competitive market,” said Denodo CEO and Founder Ángel Viña. Denodo already has its IT services partner Ejada set up in Saudi.

#2- The Kingdom’s combined live IT capacity has reached 205 MW, up from 40 MW in 2024, with 80% split between Riyadh, Jeddah, and Dammam, according to Knight Frank’s Summer 2024 Saudi Arabia Commercial Market Review (pdf). Riyadh accounts for the lion’s share of local data center capacity with 40 MW, followed by Jeddah with 29 MW and Dammam with 19 MW. Knight Frank sees some USD 30 bn in capex going into local data centers by 2030, supported by the “roll out of 5G and the introduction of the Personal Data Protection Law.”

OIL WATCH-

Opec+ may be hinting at a shift in its production policy as the fine print on its latest decision reveals it will gradually phase-out output cuts as early as October 2024, according to Bloomberg’s Javier Blas. This could either mean the group is reversing its course, growing eager to pump more oil into the market, or strategically shifting away from its USD 100-a-barrel oil target, Blas wrote.

Giving up the quest for “triple-digit prices” would not be a mistake, he added, saying that “somewhat lower prices could help it in the long-term: by easing global inflation and therefore prompting lower interest rates and higher economic growth in emerging economies; and by removing the implicit subsidy that Opec+ was granting to its US shale rivals.”

There is no telling whether the market can digest more oil: Opec’s planned phase-out is sparking debate among pundits about whether market conditions are ready to absorb the group’s extra barrels, Bloomberg reports.

Meanwhile, gov’t is playing the long game: “We are waiting for interest rates to come down and a better trajectory when it comes to economic growth ... not pockets of growth here and there,” Energy Minister Prince Abdulaziz bin Salman told Reuters on the sidelines of the Opec+ meeting on Sunday. “We will maintain our precautious and preemptive approach,” he added.

BACKGROUND- Opec+ extended crude oil production cuts during its meeting in Riyadh onSunday. Production will remain unchanged until the end of this September, when the group will begin phasing out cuts over a 12-month period.

Oil prices fell over 3% yesterday to their lowest in close to fourmonths as traders reacted to the Opec+ meeting.

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THE BIG STORY ABROAD-

#1- Tension between besties Russia and China? The Financial Times is picking up on growing tension between Russia and its closest ally China, after Beijing asked to purchase Russian gas at heavily subsidized domestic prices, endangering a major gas pipeline agreement between the two countries.

#2- Closer to home: Israel’s coalition government has fallen into infighting over a proposed ceasefire plan — and relations between Cairo and Tel Aviv are ever more frosty after Israel “defied Egyptian warnings” and took control of the Philadelphi Corridor.

#3- YOUR DAILY DOSE OF ELECTION COVERAGE- Nigel Farage, the former leader of the UK’s Independence Party and a Brexiteer, will be running in next month’s UK general election. Farage “has been one of the most influential politicians in Britain since the Thatcher era,” the Guardian writes in a profile about the politician. The general election will take place on 4 July — Labour is looking to form its first government since May 2010.

AND- Mexican voters have elected Claudia Sheinbaum as the nation’s first woman president. She looks on track to claim a 30 percentage point margin of victory, giving her the opportunity to “reshape the country’s political landscape” together with her allies, the New York Times notes. Some investors are spooked, the Financial Times writes, noting some have “sold the peso on fears of radical constitutional change.”

FINALLY- The rich be getting richer: Half of the CEOs running S&P 500 companies surveyedby AP made at least 196x what their median employee earned last year, up from 185x in 2022. Data from the newswire also showed that CEOs’ median pay package rose 12.6% to USD 16.3 mn in 2023, while wages of private sector workers rose just 4.1% during the same period.

CIRCLE YOUR CALENDAR-

The Global EV and Mobility Tech Forum will open its doors on Wednesday, 10 July to Thursday, 11 July at the Riyadh International Convention and Exhibition Center. The event will bring together policymakers, NGOs, and startups.

The Conference on Arbitration and Dispute Resolution in Energy, Oil, and Gas will be held in GCC countries for the first time in 2025, coming off the signing of a partnership between the GCC Commercial Arbitration Center, the Scottish Arbitration Center, and the International Conference on Law, according to state news agency SPA. The conference will bring together experts in international arbitration to discuss the legal, geopolitical, economic, and security aspects and challenges related to energy disputes in the GCC.