The Scoop
Citigroup has raised more than $40 billion to support Saudi clients so far this year, and increased its direct exposure to the kingdom since the Iran war began, maintaining its bet on the kingdom as a key growth market.
The US bank has decided to boost internal exposure limits because Saudi Arabia has demonstrated “strong economic resilience and financial resilience,” Citi’s chief country officer for Saudi Arabia, Fahad Aldeweesh, told Semafor in an interview.
Saudi Arabia remains a “high priority market for Citi,” with room to grow despite disruptions caused by more than six months of conflict in the region and Iran’s attempts to shut down shipping through the Strait of Hormuz.
Under CEO Jane Fraser, Citi has made Saudi Arabia a key part of its growth plans, establishing a regional headquarters in Riyadh last year and aggressively pursuing mandates on deals across initial public offerings, merger and acquisitions, and debt financings. Fraser was named co-chair of the US-Saudi Business Council last year.
Citi also acted as one of the global coordinators on Saudi Arabia’s $3.25 billion islamic bond sale earlier this month, and is reportedly advising Aramco on a potential sale of a stake in its oil export and storage terminals.
“It’s very helpful for our efforts on the ground to support clients here at this time and also to show confidence in the prospects of the country region during this period,” Aldeweesh said, declining to comment on specific transactions.
Know More
Citi has been working on boosting its Saudi footprint for several years. Although it first entered the kingdom in 1955 when it was the first US bank to operate there, it sold a stake in one of Saudi’s largest banks in 2004, ending its on-the-ground presence.
It returned in 2017 with an investment banking license as Crown Prince Mohammed Bin Salman embarked on an economic overhaul that attracted Wall Street’s biggest names, tempted by fees on government debt sales, Aramco’s IPO, and international acquisitions by the kingdom’s sovereign wealth fund.
Saudi Arabia is expected to be a strong driver for investment banking deals in coming years as it sells more debt and seeks foreign investors. Public Investment Fund has made attracting third-party capital to help fund its economic transformation projects as a pillar of its new five-year strategy and recently sent executives to New York to drum up interest from potential investors, Semafor reported last week.
Courtesy of CitiInternational private equity and infrastructure investors are showing greater interest in the kingdom, Aldeweesh said. “We see them actively looking for opportunities and also hoping additional deal flow would be made available to them,” he said. Foreign stock market investors have added $3 billion to their Saudi holdings since the start of the year, he added, boosting Citi’s trading and custody business.
Citi has a “strong” transaction pipeline in the works and is optimistic that IPO activity will pick up in coming months, Aldeweesh added. The bank employs around 35 staff in Saudi Arabia and plans to keep hiring, he said, declining to specify how many will be recruited.
Notable
- Citi opened its regional headquarters in Riyadh last year, signalling a commitment from the US bank to join peers seeking to establish a stronger foothold with the government and PIF, Bloomberg reported in October.