Japanese bank plans Saudi hires to tap $350 billion privatisation

Bloomberg

Mitsubishi UFJ Financial Group Inc. is looking to hire in Saudi Arabia as the lender seeks to benefit from privatisations valued at more than $350 billion over the next five years.
“We are planning to start expansion in Saudi Arabia by hiring 20 people,” Elyas Algaseer, the bank’s co-head in the Middle East and North Africa, said in an interview
in Dubai.
“That will go up to 60 in three-to-five years in line with our expectations of the growth in business.”
MUFG, as the bank is known, is set to become the first Japanese lender to start full banking operations in the world’s biggest oil exporter after obtaining approval from the kingdom’s central bank. Japan’s biggest bank plans to open the branch in Riyadh as early as next year, Algaseer said.
Japanese banks are seeking opportunities in Saudi Arabia as the country pursues a plan to reduce dependence on oil and diversify its economy through public-sector restructuring and infrastructure investment. MUFG may help underwrite Saudi Arabian Oil Co.’s planned share sale in 2018 as it holds a stake in Morgan Stanley, which was selected as lead underwriter with JPMorgan Chase & Co., the Nikkei newspaper reported in February. The sale could raise as much as $100 billion in what would be the world’s largest IPO.

‘Main Game’
“Saudi privatisation will play the main game in the region and reshape the kingdom’s economy,” Algaseer said, adding that privatisations in the country could exceed $350 billion in about five years. “These of course have large financing potential and financial institutions such as ourselves will be positioning to ensure that we are part of this transition process.”
MUFG, which currently manages its Saudi business from Dubai, was one of the lead arrangers on a $10 billion syndicated loan deal with the kingdom’s government last year. The bank also helped Saudi Arabia raise $17.5 billion in the biggest-ever bond sale from an emerging-market nation last October.
Still, a Saudi-led standoff against Qatar “has slowed the growth and diversification momentum since June,” Algaseer said. “The geopolitical issues will continue to restrict the diversification efforts in the region in the short term.”
Saudi Arabia, the United Arab Emirates and Bahrain cut diplomatic relations with Qatar and closed transport routes in June, accusing the nation of funding Islamic terrorists, a charge it denies.
“The political risk is still not reflecting in the credit risk and bond prices so far,” Algaseer said.
“It is very important currently that the regional political situation gets clarified.”

Opening the Gate
Algaseer hopes that deals like Abu Dhabi National Oil Co., which is said to be considering raising as much as $7 billion from the debt markets, could “open the gate for other transactions.”
“Before the end of the year, we could see many deals,” he said.
“We expect big deals to go through with many government, state-owned firms announcing and implementing privatisation, M&A, structured financing and debt-financing deals.”