SAUDI ARAMCO TREASURER DISCUSSES ARAMCO'S

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 000547 SIPDIS SIPDIS DEPT FOR NEA/ARP, EEB/IFD, EEB/ESC E.O. 12958: DECL: 04/02/2018 TAGS: ECON EFIN EINV EPET PGOV PINR SA SUBJECT: SAUDI ARAMCO TREASURER DISCUSSES ARAMCO'S INVESTMENTS Classified By: Consul General John Kincannon for Reasons 1.4 (b) and (d ). ¶1. (C/NF) SUMMARY: Saudi Aramco's Treasurer revealed to Consulate officials that Saudi Aramco manages liquid investments of approximately $60 billion, an amount he described as comparable to the fifth or sixth largest sovereign wealth fund in the Gulf. Aramco is considering a number of corporate reorganization measures that would allow them to benefit from the strong capitalization of many of their ventures. Although Saudi Aramco maintains strong relationships with many top American financial firms, their Treasurer says that a combination of factors causes Saudi Aramco to manage virtually all of its international investments from Europe. END SUMMARY. -------------- A Man Who Writes Big Checks -------------- ¶2. (C/NF) The CG and Consulate officers met with Saudi Aramco Treasurer Motassim al-Maashouq (protect) at a social event on April 1. Jokingly, the CG suggested to al-Maashouq that his most important job responsibility probably entailed sending a large check to Riyadh every month. In the same spirit, al-Maashouq replied, "Actually, it's twice a month. They're very happy. They have no idea how to spend all this money." -------------- And Manages a Large Endowment -------------- ¶3. (C/NF) Among al-Maashouq's responsibilities is managing the endowment for the new King Abdullah University of Science and Technology (KAUST). "We're the third largest endowment in the world. Harvard is $34 billion. Yale is $21 billion. Stanford is $16 billion. We're closer to Yale than Stanford." Al-Maashouq revealed that Aramco had recently retained the services of Yale's long-time portfolio manager to advise the company on investing KAUST's endowment. He noted that Aramco also maintains an active investment portfolio that has fully funded all of Aramco's future pension and medical liabilities. "When you look at all of this, we're comparable to the fifth or sixth largest sovereign wealth fund in the Gulf. We're certainly not in the league of Abu Dhabi or Kuwait, but we stack up very closely with the Qatar Investment Authority in terms of size." Most publicly available information puts QIA's assets in the range of $60 billion. -------------- With a Strong Balance Sheet -------------- ¶4. (C/NF) Al-Maashouq said that Saudi Aramco was examining a number of corporate reorganization strategies that might allow it to benefit from its strong and very conservative balance sheet. "For example," said al-Maashouq, "you might not be aware that Saudi Aramco is one of the largest real estate developers in Saudi Arabia. We buy large plots of land, develop housing, give loans to our employees to purchase it, but hold the title until the loan is fully paid off. We also control the employee's paycheck. You may have a sub-prime mortgage crisis in America, but this is as safe as could be. We're looking at ways we could move the real estate arm out of the company, perhaps spin off our medical services with a strategic partner, and look at ways to leverage the Vela shipping fleet. We look at GE Finance and GMAC Financing as potential models." -------------- But Aramco Manages Its Money in Europe -------------- ¶5. (C/NF) Al-Maashouq opined that the United States "has really screwed up" by squandering American leadership in international capital and finance. "You guys have restored London as the world's international financial center by shooting yourselves in the foot." Citing a superior regulatory environment, many fewer visa hassles, and NOPEC legislation, al-Maashouq said that Aramco preferred to manage the bulk of its international investments through London or sometimes the Channel Islands. Noting that Aramco maintains strong relationships with major American financial firms like JP Morgan Chase, KKR, Blackstone, and Warburg Pincus, al-Maashouq said that Aramco chose to work with their London offices rather than dealing with the visa problems and a less certain regulatory environment in the United States. APPROVED: JKINCANNON FRAKER