Saudi Arabia’s privatisation plans

Saudi Arabia has announced their objective to raise $200 billion in the next few years through privatization programs. The program will run in 16 sectors; ranging from oil, education, healthcare, airports and grain milling. They are also planning to raise another $100 billion through the sale of 5% stake in Saudi Aramco.

The following is a list of privatization plans underway in the Kingdom:

Saudi Aramco

The Saudi government have planned to sell 5% of Saudi Aramco through an initial public offering. Originally, officials said the stocks would be listed through Riyadh and at least one other foreign listing. However, recently they’ve suggested that it will only be listed in Riyadh, although this is still not finalized.

Saudi Postal Corp

In February, Riyadh invited banks to apply for an advisory role in the sale of the state-owned Saudi Postal Corp, but since then, it is unclear if any bank has been mandated. However, Abdullah Alswaha, Minister of Communications and Information Technology, told Reuters that the organization would undergo a 5 year “corporatization phase” before the sale.

Saudi Grains Organization

The state-owned Saudi Grains Organizations, which handle the country’s grains purchases and milling operations are being prepared for private sale. The milling operations have been arranged into four special entities to be sold to private organizations. There have already been interest from agribusiness giants such as U.S. Archer Daniels Midland Co and Bunge, however, prospective investors showed hesitation to the ownership limitations.

Sports

The Saudi Arabian investment bank Jadwa Investment have been selected to advise on the privatization of at least five soccer teams in the Saudi Professional League.

Airports

Faisal Hamad al-Sugair, Chairman of Saudi Civil Aviation Holding Company, told Reuters that it was on track to privatize 27 airports in the Kingdom. Goldman Sachs was hired to facilitate the sale of a minority stake in the King Khalid International Airport of Riyadh. In April, Singapore’s Changi Airport Group was awarded the contract to operate the King Abdulaziz International Airport in Jeddah for up to 20 years.

Saudi Arabian Airlines

Although the airline has begun the sale of its medical services business in Jeddah, valued at over $500 million, the sale has seen little progress and therefore, has been put on hold.

Healthcare

Of the first to be privatized is one of Saudi Arabia’s top hospitals, King Faisal Specialist Hospital and Research Centre in Riyadh. The process is in an “advanced stage” said Vice Minister of Economy and Planning, Mohammed al-Tuwaijri.

Education

Saudi Arabia hired HSBC as a financial adviser in the privatization of construction and management of school buildings.

Saudi Electricity Co

Saudi government plan to split state-owned Saudi Electricity Co into separate companies that will be offered locally through initial public offerings or offered to local and international corporate partners.

Saline Water Conversion Corp

Officials outlined plans to privatise the Saline Water Conversion Corp, who are responsible for desalinating water and producing electricity. The corporation would be turned into a joint-stock holding company served by local product units; investment partners would then be sought, followed by an IPO for the holding company. Recently, banks submitted bids to advise on the privatisation of the company’s $7.2 billion Ras Al Khair desalination and power plant.