Apicorp sees reforms opening the region up for investors

Apicorp sees Mena opening up to new private sector investment opportunities

The Arab Petroleum Investments Corporation (Apicorp) expects the Middle East and North Africa (Mena) region to open up to new investment opportunities as countries in the region push through reforms in an effort to prepare their economies for a post-oil world.

“The Saudi Aramco [IPO] and Vision 2030 have really created a lot of opportunities, and not just limited to Saudi Arabia,” said Bennie Burger, the head of corporate strategy and investments at Apicorp.

“Investors and banks are having another look at how things have been done and how privatised companies can do things in different ways,” he said.

Goldman Sachs is one of the many fin­ancial services players that have flocked to Saudi Arabia in search of business related to the Aramco IPO – which has so far been only vaguely sketched out by the government – as well as other mandates that might emanate from the reforms that are integral to the kingdom’s Vision 2030 programme.

On Sunday, Apicorp announced a partnership with Goldman Sachs whereby the bank’s New York energy private equity team will advise Apicorp and other investors on energy co-investments, mainly outside the Mena region, Mr Burger said.

Apicorp was founded in 1975 by the 10 member countries of Organization of Arab Petroleum Exporting Countries with a mandate to make commercial investments that will also bring strategic benefit to its members.

The bank had assets of US$5.65 billion at the end of 2015. It had invested exclusively within Mena until last spring, when it bought the UK-based Ashtead Technology, which specialises in sub-sea technology and services for energy companies, for an undisclosed amount in a co-investment with Buckthorn Partners, a private equity firm run by former Weatherford and BP executive Nicholas Gee.

Mr Burger said Apicorp set a new strategy four years ago with objectives that included investing outside Mena, the transfer of technology to the energy sector in its member countries, as well as acquiring private equity skills through partnerships and co-investments such as the Goldman tie-up and the Buckthorn co-investment.

The amount that will be invested via the Goldman deal – which will include other as yet unnamed investors – was not disclosed, but Mr Burger said it was likely to be below $1bn in total.

Goldman Sachs is one of the many banks rumoured to have been asked to pitch the Saudi government for a role in the prospective Aramco IPO since last year’s announcement by the Saudi Deputy Crown Prince Mohammed bin Salman galvanised interest.

In the past month, two “boutique” New York investment banks – Moelis & Co and Evercore – were widely reported to have been given advisory roles for the Aramco IPO, although no party has officially confirmed that.

Other unsourced reports have said the banks asked to pitch for a role in the IPO include Goldman, HSBC, Credit Suisse, Morgan Stanley, Citigroup and JP Morgan Chase.

Banking in the region has generally been contracting as lending has been squeezed by the oil price slump. But the investment advisory side of the business has been increasing amid the government reforms, with Evercore the latest reported to be setting up a regional headquarters in Dubai.

On Sunday, Bloomberg reported that Goldman Sachs had begun the process to get a licence to deal directly in Saudi Arabian equities, as a qualified foreign investor (QFI). Goldman was also one of the banks that arranged the Saudi government’s record-breaking $17.5bn international bond issue.

Citibank and Credit Suisee also are among those rumoured to have applied for a QFI licence, while the latter said last month it has committed $600 million to expand investments in the kingdom.

Follow The National's Business section on Twitter