PHOTO
RIYADH- Following is the text of Reuters interview with Saudi Arabia's Crown Prince Mohammed bin Salman.
He spoke on a number of issues, including NEOM, the $500 billion mega-city announced this week, which he said will be floated on financial markets alongside oil giant Saudi Aramco as part of the kingdom's drive to diversify away from oil.
Q: Is the Aramco IPO still on track
"We are on track in 2018... but the listing is still under discussion.
"It will be IPO-ed in 2018, it is on track."
Q: Do you expect to bring in cornerstone investors for NEOM Will you expect some of the many institutions that have managed money for the kingdom for years to maybe give some back too and play a role
"Of course the investment is not that we invest with you today so you invest with us tomorrow. These are opportunities. Whenever we provide a good opportunity, the investor will come looking for it. I believe in NEOM there are some exceptional opportunities, and I believe yesterday on stage (at a conference in Riyadh) there was a group of key investors from around the world and they were committed to bringing their investments to NEOM which they announced yesterday. They know the sectors in which they intend to go. There are many other than those who came out yesterday. In 2018 we'll hear a lot of these announcements."
Q: Would you IPO NEOM
"Without a doubt. At the end of the day NEOM will be floated in the markets. The first zone floated in the public markets. It's as if you float the city of New York."
Q: I don't think that's ever been done in history.
"Without a doubt. The first capitalist city in the world... This is the unique thing that will be revolutionary in the city and its growth."
Q: What is the timeframe for doing this
"Imagine the board is appointed by the owners and the governor is appointed by the board. His role is only one thing: growth. Unlike other cities in the world. Like in New York, the governor is appointed to meet certain needs, including growth, but in NEOM the governor doesn't have to deal with any of those problems, he only has growth in mind."
Q: What percentage of NEOM will the state own
"We have NEOM authority and NEOM company... The PIF (sovereign wealth fund) will own 100 percent in NEOM company. It won't be listed in the markets until the idea is mature enough... it might be after 2030, it might be before but the idea and the strategy is to float it eventually."
Q: Investors don't get a stake in the company, they get opportunity
"Yes, whether in industry, energy, lifestyle or the nine sectors that were announced."
Q: How will life be different in NEOM than it is in the kingdom
"As you know, NEOM is between three countries. It is only 3.5 km from Egypt. By car, it's less than two minutes from nearest point, from the farthest point it's 20-25 km drive. It's like driving from one part of Manhattan to SoHo."
Q: What is the meaning of the name and who named it
"We had a lot of names that we were supposed to adopt, they were all good names but we did not want a name based on the Arabic language, or a name based in the Latin language or any other language. We wanted something that represents humanity in general. There were many suggestions. We took the initials of the main nine sectors and some of the key landmarks in this zone and we put this into the word neo-mustaqbil. Mustaqbil means future. Neo-mustaqbil is too long so we made it NEOM. It sounds like a futuristic name at the same time so there is a meaning behind it."
Q: Is there any change at all in your Vision
"Vision 2030 is about a lot of big opportunities, so Aramco is one of them, NEOM another opportunity. We have the Red Sea Project, we have the Qiddiya Project, we have a lot of small projects also. We have a lot of huge projects we will announce in the next few years."
Q: Is the listing of Aramco important for the development of Saudi Arabia's capital markets
"The idea is not to restructure the economy as much as to seize the opportunities available that we didn't address before. We have high capacity and we use only a little. We only use oil, so we have a lot of opportunity to use the capacity we have in Saudi Arabia. In the oil sector, oil and the downstream of oil, petrochemicals, etc. Gas, we're still discovering a lot of things in the Red Sea. And also tourists, we think we can hit more than 40 million tourists in 2030. Thirty million will come to Mecca and Medina and we will have 10 million for recreation or historical sites or business tourists. Forty million is a big number. Today we have 15 million, so this is also huge. We are not starting from zero and we have big capacity to invest in this.
"We have a lot of minerals untouched in Saudi Arabia. More than 90 percent of minerals, it could reach 95 percent and it's not any kind of minerals. Gold, with value more than $240 billion dollars untouched, silver more than $150 billion. So we have precious metals in total more than a trillion dollars. More than $1 trillion dollars of minerals, now we are discovering a lot of things and we put a lot of programs to exactly know what's the value of the minerals we have in Saudi Arabia Could we reach 2 trillion, could we reach more than that inside Saudi Arabia But now we have a lot of numbers above $1 trillion. It will be announced in two months in the Saudi industry programme.
"Transportation is an important sector - maritime, air and land. There are huge projects in this regard like King Salman Causeway linking Asia to Africa. The Red Sea witnesses 10 percent of global trade and we provide no services. Huge opportunities. Huge transport network and transport density passing in the air above Saudi Arabia without us acquiring our fair share. So you have huge opportunities in transportation.
"We also have smaller scattered sectors. Number 6 we have local content. We import goods worth $200 billion. To be more accurate, more than $200 billion leaves Saudi Arabia on an annual basis. The first chapter of this is for military industries, $60 billion. The second chapter is tourism, more than $20 billion. The third sector is automobiles. Our target is that half this sum is spent inside the kingdom by 2030. This will generate tremendous opportunities and chances to create new industries in the kingdom: in military industries, in automobile assembly, in tourism, in many things. So local content is a very important sector.
"Number 7 is investment: privatisation from Aramco to airports to ports even to sports clubs. There is a huge privatisation program that will generate tremendous cash that will go to PIF and will be pumped into great opportunities in and out of Saudi."
Q: Will you be asking companies that have made money in Saudi Arabia over the years to invest some of it back here
"We don't want to squeeze investors. If we cannot offer good opportunities in Saudi, that means no one would come. We think we really have great opportunities in Saudi Arabia. We want to shape it and to invest in it ourselves and also to allow people all over the world to invest in it. Of course we say to investors: we don't want you to invest for the sake of getting returns. We want to create new things, we want to make things happen. This is what we create with the Softbank Vision Fund, $100 billion, the biggest fund and technology in the whole world. So it makes things happen for different companies all over the world because they have shares of those companies that's why we make things happen. We do the same thing for example with Blackstone, the largest infrastructure fund in the whole world, $50 billion and with ROI 14 percent. This is what we expect. We do massive complex investment to get everything related to each other. We want to create new sectors, new things, on a big scale with a lot of money.
"PIF is setting a new role in the investment world. Before PIF, a (fund with a) lot of money means low income. Our philosophy and method is with a lot of money you can create a new industry that means a lot of money.
Q: Are you still confident in the valuation of Saudi Aramco at $2 trillion
"I know that there has been a lot of argument around this topic but at the end of the day the right say is that of the investor. Undoubtedly the biggest IPO in the world must be accompanied by a lot of rumours. If we look at the biggest IPO before Aramco, which was Ali Baba, it was accompanied by a lot of rumours. And eventually the investor and Ali Baba have proved otherwise. Aramco will prove itself on the ground, on the day of the IPO.
"Actually when I talked about the valuation, I talk about $2 trillion, it could be more than $2 trillion. So when I say $2 trillion that means to put ourselves in a place and lose a few hundred billions..."
Q: Impact of the Gulf-Qatar rift or Yemen war on Vision 2030 and investments sentiment in Saudi Arabia
"Qatar is a very, very, very small issue.
"We are very committed to have our country safe, far away from any disturbance. I will say one thing, that the only country in the Middle East where that safety and stability track-record goes for Saudi Arabia.
"Saudi Arabia has the best track-record and has proven itself strongly in each problem in the Middle East and the world and handled it and went on to be more powerful."
Q: How is the partial sale of Aramco essential to your Vision 2030 Given that the kingdom could raise similar amount or more in the capital markets without Aramco IPO, what is the signal that you are sending here
"The government should not be in control of the private sector. You create opportunity, you create business, you create development, you hand it to the investor and start creating something new. Of course you would support it to grow all the time because it is part of your economy you can't let it fall... actually we are behind other countries in privatisation, that's why we are trying to catch up."
Q: Does the bridge for NEOM need to be cleared to Israel
"No, we shouldn't clear it with Israel because it's between Saudi Arabia and Egypt. Of course we cannot block an international route so this will be taking into consideration that the bridge will not block the international route."
Q: Is it close to Sanafir and these islands
A: Until now we didn't decide the exact place of the bridge but there is amazing coral there, there is amazing nature there so it would be very painful to have the bridge above those corals, so we are trying to make it in the deep water. It will be a world wonder to build a bridge in that kind of deep water."
Q: Will OPEC pact with other producers be extended until end of 2018
"We are committed to work with all producers, OPEC and non-OPEC countries. We have a great and historic deal... We will support anything to stabilize the oil demand and supply. I think now the oil market swallowed the shale oil supply, now we are regaining things again."
Q: Any change of heart on policy in Yemen
"If we want to create another Hezbollah in the Middle East, then let's change our policy in Yemen."
Q: You're pursuing until the end
"We're pursuing until we can be sure that nothing will happen there like Hezbollah again, because Yemen is more dangerous than Lebanon. It's next to Bab al-Mandab so if something happens there, that means 10 percent of world trade stops. This is the crisis."
(Reporting By Stephen Kalin; Editing by Samia Nakhoul) ((stephen.kalin@tr.com; +971 52 322 9759; Reuters Messaging: stephen.kalin.thomsonreuters.com@reuters.net))
He spoke on a number of issues, including NEOM, the $500 billion mega-city announced this week, which he said will be floated on financial markets alongside oil giant Saudi Aramco as part of the kingdom's drive to diversify away from oil.
Q: Is the Aramco IPO still on track
"We are on track in 2018... but the listing is still under discussion.
"It will be IPO-ed in 2018, it is on track."
Q: Do you expect to bring in cornerstone investors for NEOM Will you expect some of the many institutions that have managed money for the kingdom for years to maybe give some back too and play a role
"Of course the investment is not that we invest with you today so you invest with us tomorrow. These are opportunities. Whenever we provide a good opportunity, the investor will come looking for it. I believe in NEOM there are some exceptional opportunities, and I believe yesterday on stage (at a conference in Riyadh) there was a group of key investors from around the world and they were committed to bringing their investments to NEOM which they announced yesterday. They know the sectors in which they intend to go. There are many other than those who came out yesterday. In 2018 we'll hear a lot of these announcements."
Q: Would you IPO NEOM
"Without a doubt. At the end of the day NEOM will be floated in the markets. The first zone floated in the public markets. It's as if you float the city of New York."
Q: I don't think that's ever been done in history.
"Without a doubt. The first capitalist city in the world... This is the unique thing that will be revolutionary in the city and its growth."
Q: What is the timeframe for doing this
"Imagine the board is appointed by the owners and the governor is appointed by the board. His role is only one thing: growth. Unlike other cities in the world. Like in New York, the governor is appointed to meet certain needs, including growth, but in NEOM the governor doesn't have to deal with any of those problems, he only has growth in mind."
Q: What percentage of NEOM will the state own
"We have NEOM authority and NEOM company... The PIF (sovereign wealth fund) will own 100 percent in NEOM company. It won't be listed in the markets until the idea is mature enough... it might be after 2030, it might be before but the idea and the strategy is to float it eventually."
Q: Investors don't get a stake in the company, they get opportunity
"Yes, whether in industry, energy, lifestyle or the nine sectors that were announced."
Q: How will life be different in NEOM than it is in the kingdom
"As you know, NEOM is between three countries. It is only 3.5 km from Egypt. By car, it's less than two minutes from nearest point, from the farthest point it's 20-25 km drive. It's like driving from one part of Manhattan to SoHo."
Q: What is the meaning of the name and who named it
"We had a lot of names that we were supposed to adopt, they were all good names but we did not want a name based on the Arabic language, or a name based in the Latin language or any other language. We wanted something that represents humanity in general. There were many suggestions. We took the initials of the main nine sectors and some of the key landmarks in this zone and we put this into the word neo-mustaqbil. Mustaqbil means future. Neo-mustaqbil is too long so we made it NEOM. It sounds like a futuristic name at the same time so there is a meaning behind it."
Q: Is there any change at all in your Vision
"Vision 2030 is about a lot of big opportunities, so Aramco is one of them, NEOM another opportunity. We have the Red Sea Project, we have the Qiddiya Project, we have a lot of small projects also. We have a lot of huge projects we will announce in the next few years."
Q: Is the listing of Aramco important for the development of Saudi Arabia's capital markets
"The idea is not to restructure the economy as much as to seize the opportunities available that we didn't address before. We have high capacity and we use only a little. We only use oil, so we have a lot of opportunity to use the capacity we have in Saudi Arabia. In the oil sector, oil and the downstream of oil, petrochemicals, etc. Gas, we're still discovering a lot of things in the Red Sea. And also tourists, we think we can hit more than 40 million tourists in 2030. Thirty million will come to Mecca and Medina and we will have 10 million for recreation or historical sites or business tourists. Forty million is a big number. Today we have 15 million, so this is also huge. We are not starting from zero and we have big capacity to invest in this.
"We have a lot of minerals untouched in Saudi Arabia. More than 90 percent of minerals, it could reach 95 percent and it's not any kind of minerals. Gold, with value more than $240 billion dollars untouched, silver more than $150 billion. So we have precious metals in total more than a trillion dollars. More than $1 trillion dollars of minerals, now we are discovering a lot of things and we put a lot of programs to exactly know what's the value of the minerals we have in Saudi Arabia Could we reach 2 trillion, could we reach more than that inside Saudi Arabia But now we have a lot of numbers above $1 trillion. It will be announced in two months in the Saudi industry programme.
"Transportation is an important sector - maritime, air and land. There are huge projects in this regard like King Salman Causeway linking Asia to Africa. The Red Sea witnesses 10 percent of global trade and we provide no services. Huge opportunities. Huge transport network and transport density passing in the air above Saudi Arabia without us acquiring our fair share. So you have huge opportunities in transportation.
"We also have smaller scattered sectors. Number 6 we have local content. We import goods worth $200 billion. To be more accurate, more than $200 billion leaves Saudi Arabia on an annual basis. The first chapter of this is for military industries, $60 billion. The second chapter is tourism, more than $20 billion. The third sector is automobiles. Our target is that half this sum is spent inside the kingdom by 2030. This will generate tremendous opportunities and chances to create new industries in the kingdom: in military industries, in automobile assembly, in tourism, in many things. So local content is a very important sector.
"Number 7 is investment: privatisation from Aramco to airports to ports even to sports clubs. There is a huge privatisation program that will generate tremendous cash that will go to PIF and will be pumped into great opportunities in and out of Saudi."
Q: Will you be asking companies that have made money in Saudi Arabia over the years to invest some of it back here
"We don't want to squeeze investors. If we cannot offer good opportunities in Saudi, that means no one would come. We think we really have great opportunities in Saudi Arabia. We want to shape it and to invest in it ourselves and also to allow people all over the world to invest in it. Of course we say to investors: we don't want you to invest for the sake of getting returns. We want to create new things, we want to make things happen. This is what we create with the Softbank Vision Fund, $100 billion, the biggest fund and technology in the whole world. So it makes things happen for different companies all over the world because they have shares of those companies that's why we make things happen. We do the same thing for example with Blackstone, the largest infrastructure fund in the whole world, $50 billion and with ROI 14 percent. This is what we expect. We do massive complex investment to get everything related to each other. We want to create new sectors, new things, on a big scale with a lot of money.
"PIF is setting a new role in the investment world. Before PIF, a (fund with a) lot of money means low income. Our philosophy and method is with a lot of money you can create a new industry that means a lot of money.
Q: Are you still confident in the valuation of Saudi Aramco at $2 trillion
"I know that there has been a lot of argument around this topic but at the end of the day the right say is that of the investor. Undoubtedly the biggest IPO in the world must be accompanied by a lot of rumours. If we look at the biggest IPO before Aramco, which was Ali Baba, it was accompanied by a lot of rumours. And eventually the investor and Ali Baba have proved otherwise. Aramco will prove itself on the ground, on the day of the IPO.
"Actually when I talked about the valuation, I talk about $2 trillion, it could be more than $2 trillion. So when I say $2 trillion that means to put ourselves in a place and lose a few hundred billions..."
Q: Impact of the Gulf-Qatar rift or Yemen war on Vision 2030 and investments sentiment in Saudi Arabia
"Qatar is a very, very, very small issue.
"We are very committed to have our country safe, far away from any disturbance. I will say one thing, that the only country in the Middle East where that safety and stability track-record goes for Saudi Arabia.
"Saudi Arabia has the best track-record and has proven itself strongly in each problem in the Middle East and the world and handled it and went on to be more powerful."
Q: How is the partial sale of Aramco essential to your Vision 2030 Given that the kingdom could raise similar amount or more in the capital markets without Aramco IPO, what is the signal that you are sending here
"The government should not be in control of the private sector. You create opportunity, you create business, you create development, you hand it to the investor and start creating something new. Of course you would support it to grow all the time because it is part of your economy you can't let it fall... actually we are behind other countries in privatisation, that's why we are trying to catch up."
Q: Does the bridge for NEOM need to be cleared to Israel
"No, we shouldn't clear it with Israel because it's between Saudi Arabia and Egypt. Of course we cannot block an international route so this will be taking into consideration that the bridge will not block the international route."
Q: Is it close to Sanafir and these islands
A: Until now we didn't decide the exact place of the bridge but there is amazing coral there, there is amazing nature there so it would be very painful to have the bridge above those corals, so we are trying to make it in the deep water. It will be a world wonder to build a bridge in that kind of deep water."
Q: Will OPEC pact with other producers be extended until end of 2018
"We are committed to work with all producers, OPEC and non-OPEC countries. We have a great and historic deal... We will support anything to stabilize the oil demand and supply. I think now the oil market swallowed the shale oil supply, now we are regaining things again."
Q: Any change of heart on policy in Yemen
"If we want to create another Hezbollah in the Middle East, then let's change our policy in Yemen."
Q: You're pursuing until the end
"We're pursuing until we can be sure that nothing will happen there like Hezbollah again, because Yemen is more dangerous than Lebanon. It's next to Bab al-Mandab so if something happens there, that means 10 percent of world trade stops. This is the crisis."
(Reporting By Stephen Kalin; Editing by Samia Nakhoul) ((stephen.kalin@tr.com; +971 52 322 9759; Reuters Messaging: stephen.kalin.thomsonreuters.com@reuters.net))
