Wall Street returns to Saudi Arabia as biggest deals entice CEOs

New York: Some of the world’s leading financiers are returning to Saudi Arabia after the kingdom yielded some of the year’s biggest merger and bond deals.

The arrival of top banking executives in Riyadh comes six months after the murder of journalist Jamal Khashoggi.

HSBC Holdings Plc’s Chief Executive Officer John Flint and BlackRock Inc’s Larry Fink are among speakers at a two-day financial conference that started on Wednesday.

“The pressures not to attend seem to be a lot less this year,” said Paul Sullivan, a Middle East expert at Georgetown University’s Centre for Security Studies.

Saudi appetite

While the US has blacklisted 16 Saudi nationals for their role in the killing, the diplomatic crisis for business has proved to be little more than a blip. An about 40 per cent increase in oil prices since the start of the year has helped too.

“I don’t think the global investor community has ever shunned Saudi Arabia,” Jamal Al Kishi, Deutsche Bank AG’s Chief Executive Officer for the Middle East and Africa, said in an interview with Bloomberg TV ahead of the conference. “The attendance here, transactions being done for and in Saudi Arabia over the last few months, all indicate an unwavering commitment to the country and a very enduring appetite for Saudi Arabia and the risk profile it offers.”

Hottest deals

Saudi Arabia has been home to some of the world’s hottest deals this year, as Europe and Asia have languished. JPMorgan Chase & Co., Morgan Stanley, HSBC, Citigroup Inc and Goldman Sachs Group Inc this month helped Saudi Aramco raise $12 billion (Dh44 billion) of bonds in one of the most oversubscribed debt offerings in history.

Morgan Stanley and JPMorgan are also advising the oil firm on its $69 billion acquisition of local chemical giant Sabic. Spokesmen for Morgan Stanley, JPMorgan, HSBC and BlackRock all declined to comment.

JPMorgan’s Jamie Dimon will be represented by co-president Daniel Pinto, while Clare Woodman, Morgan Stanley’s head of Europe, the Middle East and Africa, will also address the gathering of Saudi government officials, business heads and international bankers.

Money managers have been signalling plans to put the Khashoggi incident behind them. “There is not any community in the world that is perfect,” BlackRock’s Fink said in an interview with CNBC last week. JPMorgan’s Dimon said shortly after the conference that skipping the event accomplished ‘nothing.’

Promising environment

Goldman Sachs’ David Solomon this month made his first trip to Riyadh as CEO, the first head of a global US bank known to have travelled to the country since Khashoggi’s murder. Inside Goldman Sachs, senior executives have indicated Saudi Arabia offers a more promising environment for growing the investment bank’s business than other parts of the Middle East, according to one senior banker at the US bank.

“Saudi Arabia remains one of the wealthiest countries in the world with one of the world’s largest sources of energy reserves, which helps explain the huge interest in Saudi Aramco’s recent bond issuance,” said Emily Hawthorne, Middle East and North Africa analyst at Texas-based advisory firm Stratfor Enterprises.

FDI struggle

Still, the hype over Saudi deals masks a struggle to attract long-term foreign direct investments crucial to reduce the reliance on oil. While FDI more than doubled last year to about $3 billion, it remains well below the average level of the past decade.