Saudi Aramco said on Thursday it is looking to buy a strategic stake in Saudi petrochemical maker SABIC, a move that could boost the state oil giant's market valuation ahead of a planned initial public offering.
Aramco said in a statement that it was in “very early-stage discussions” with the kingdom's Public Investment Fund (PIF) to acquire the stake in SABIC via a private transaction. It has no plans to acquire any publicly held shares, it said.
Riyadh-listed SABIC, the world's fourth-biggest petrochemicals company, is 70 percent owned by the PIF, Saudi Arabia's top sovereign wealth fund. It has a market capitalisation of 385.2 billion Saudi riyals ($103 billion).
Reuters reported on Wednesday that Saudi Aramco had invited banks to pitch for an advisory role on the potential acquisition of a strategic stake in Saudi Basic Industries Corp (SABIC), citing two sources with direct knowledge of the matter.
The size of the stake Aramco is interested in acquiring is not known.
Aramco said it had been evaluating a number of acquisition opportunities, both local and global, in line with its strategy of rebalancing its portfolio by moving further into downstream, particularly the petrochemical sector.
In a separate statement, the PIF said that talks on a sale were in the early stages. “There is a possibility that no agreement will be reached in relation to this potential transaction,” the PIF said.
Aramco wants to develop its downstream business as the government prepares to sell up to 5 percent of the world's largest oil producer, possibly by next year. Boosting its petrochemicals portfolio further could help attract investors for the IPO.
Shares in SABIC, the largest listed company in the Gulf, were down by 0.3 percent at 0945 GMT on Thursday. Aramco invited the banks to pitch for a potential SABIC deal last month, the sources told Reuters on Wednesday, declining to be identified due to commercial sensitivities.