Saudi Fund Is Working With Klein, Evercore on Strategy

Updated on
  • PIF hiring international expertise as it targets $2 trillion
  • Boutique banks building presence in kingdom amid Aramco IPO

Saudi Sovereign Fund CEO on Investment Strategy

Saudi Arabia’s wealth fund, which aims to control more than $2 trillion by 2030, is working with rainmaker Michael Klein and boutique Evercore Inc. on its global investment strategy and financing plans, according to people familiar with the matter.

Klein, the former Citigroup Inc. investment banker who runs his own boutique, is advising Public Investment Fund on its partnerships with international companies and working closely with Managing Director Yasir Al-Rumayyan, the people said, asking not to be identified because the details aren’t public. Evercore is providing advice on strategic and funding options, the people said.

The roles will cement the two independent banks’ position in the transformation of the Saudi Arabian economy as both are already working on the blockbuster initial public offering of the kingdom’s state-owned oil company Saudi Arabian Oil Co. Klein is said to be providing strategic advice to the government for the IPO of Aramco, as it’s known, while Evercore is working alongside rival Moelis & Co. as a financial adviser on the offering, people familiar with the matter said in March. The boutiques will help the oil giant pick underwriting banks, make decisions on potential listing venues and ensure the IPO goes smoothly, they said.

PIF, as it’s known, is bringing international expertise as it pushes ahead with plans to transform itself into one of the world’s largest sovereign wealth funds. The fund is at the center of Saudi Arabia’s efforts to diversify revenue away from oil under an economic transformation plan known as Vision 2030. The kingdom plans to sell shares in Aramco in what could be the largest IPO in history, and transfer ownership to PIF.

PIF was not immediately available for comment. Representatives for Klein and Evercore declined to comment.

Klein Deals

Klein, 53, is a prolific force in the M&A industry, landing roles advising on some of the biggest deals in the past few years. M Klein & Co. was listed first among advisers to Dow Chemical Co. on its merger with DuPont Co., one of the largest-ever chemicals deal. He also worked as a go-between for the chief executive officers on Glencore Plc’s 2012 merger with Xstrata Plc, people with knowledge of the deal said at the time.

Evercore, founded by former deputy U.S. Treasury Secretary Roger Altman, opened an office in Dubai earlier this year to tap regional opportunities. The firm now has about 10 investment bankers based in the emirate’s financial hub, including new hires and some who have relocated from other offices, the people said.

PIF plans to borrow to boost returns from its investments and is targeting annual returns of 8 percent to 9 percent over the longer term, or 2025 to 2030, Al-Rumayyan said an interview in Riyadh last month. The fund will also look for more partnerships like its tie-ups with money managers Blackstone Group LP and SoftBank Group Corp., he said.

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Blackstone, SoftBank

The wealth fund has agreed to contribute $20 billion to a U.S. infrastructure fund managed by Blackstone that could manage a total of $40 billion in equity commitments from other investors. It is also putting $45 billion into a global technology fund run by SoftBank. The deals are part of PIF’s plan to have 25 percent of its assets in international investments by 2030, up from 5 percent in September.

Separately, Saudi Arabia arrested princes, billionaires and officials over the weekend in a surprise crackdown on alleged corruption. More arrests are expected and the Saudi Arabian Monetary Authority sent a list of hundreds of names to lenders, telling them to freeze any accounts linked to them, people familiar told Bloomberg Tuesday.

The arrests included two PIF board members -- former economy and planning Minister Adel Fakeih and former finance minister Ibrahim Al-Assaf, according to an infographic published by Al-Eqtisadiah newspaper on Sunday.

Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore and a non-executive director at Blackstone.

— With assistance by Sonali Basak, Matthew Martin, and Javier Blas

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