VZCZCXRO1178
PP RUEHDE RUEHDIR
DE RUEHRH #0547/01 0931313
ZNY CCCCC ZZH
P 021313Z APR 08
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC PRIORITY 8109
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
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