What the $2 Trillion Saudi IPO Means for You

by | published June 23rd, 2017

As the investment world prepares for what is becoming the most sought-after IPO in history, problems may be forming on the horizon.

The IPO is for a 5% position in the largest oil producer in the world – Saudi Aramco, Saudi Arabia’s national oil company.

When the dust clears from this one, a new sovereign wealth fund will be set up having as much as $2 trillion in purchasing power. Instantly, this will be the largest ever established.

This will usher in one of the most interesting diversification programs ever attempted.

While other “rentier” states – ones that depend on revenues from the extraction of raw materials – desperately attempt to diversify their internal economies by developing industrial production and service sectors, the Saudis are instead acquiring all manner of non-oil assets abroad.

Some of these may, of course, end up having subsidiaries or even headquarters in Saudi Arabia.

There are also signs that some of these investments will be to allow a major diversification of energy provision inside the country.

That will move the country from relying on oil to emphasizing solar, wave power, and even spinoffs from a number of desalinization plants. 

Nonetheless, a novel idea is emerging: for the first time a country will change the nature of its domestic economy by controlling a range of activities outside its own borders.

This makes virtually any publicly traded company anywhere in the world suddenly a potential target for Saudi investment money (and possible control).

Which makes the Aramco IPO uniquely important in the history of stock markets.

But as the world gears up for this hotly anticipated investment roadshow, three complications are setting in that may create some problems for Riyadh…

And opportunities for us…

The Simple Reason Why Renewables are Surging (It’s Not the Government)

by | published June 21st, 2017

After last year’s election, a number of pundits had predicted that a Trump victory would usher in a new age for coal and crude oil in the U.S.

Renewables, like solar and wind, would be used as alternatives only in certain regions of the country – or so these pundits suggested.

Well, it’ hardly worked out that way, even with the more recent decision to cut the U.S. from the Paris Climate Accord.

Renewables are soldiering on, and the reason is simple (and market-based)