Goldman Sachs in Talks for Saudi Arabian Equities License

Goldman Sachs Group Inc. is in preliminary talks for an equities license in Saudi Arabia as the U.S. lender seeks to take advantage of the country’s economic reforms, according to people familiar with the matter.

The bank has yet to file a formal application, the people said, asking not to be identified as the information is private. While talks are ongoing, no final decisions have been made, the people said. The bank may also decide against going ahead with the submission, they said.

A Goldman Sachs representative declined to comment. Saudi Arabia’s Capital Markets Authority, which would approve the license, didn’t immediately respond to requests for comment.

Companies including Ashmore Group Plc have already acquired licenses to invest directly in the kingdom’s equities as Qualified Foreign Investors (QFIs) after the country opened to foreign investment in 2015. Citigroup Inc. also won QFI approval in 2015, people with knowledge of the matter said at the time. Saudi Arabia is emerging as an attractive opportunity for international banks as the kingdom takes steps to overhaul its economy, including plans for what could be the largest-ever initial public offering with the listing of Saudi Arabian Oil Co.

Goldman Sachs is one of the banks that Aramco’s asked to pitch for an advisory role on the listing, people familiar with the matter said in January. It was also one of the arrangers of Saudi Arabia’s debut international bond sale last year. The kingdom raised $17.5 billion in the biggest ever issue from an emerging-market nation in October.

Broader Presence

Other global banks are also planning to seek a broader presence in the kingdom. Citigroup Inc. is in advanced discussions for a banking license in Saudi Arabia, returning after a more than 10-year absence, people familiar with the matter have said. Credit Suisse Group AG has allocated about $600 million of its own capital to expand in the country as it seeks a license, people familiar with the matter said in February.

Goldman Sachs set up a dedicated Saudi Arabian business in 2008 after securing a license from the Capital Markets Authority, according to information on its website. The bank is currently eligible to offer asset management services to institutions and companies, as well as advise on corporate finance transactions in the country. The new license would allow them to buy and sell Saudi Arabian equities as well.

Saudi Arabia’s stock exchange is the Arab world’s largest with a total market capitalization of about 1.61 trillion riyals ($429 billion). It’s home to Saudi Basic Industries Corp., one of the world’s largest chemicals manufacturers and Saudi Telecom Co., the Gulf kingdom’s biggest telecommunications operator.