After missing out on at least $25 billion in deals in Abu Dhabi—the Emirate that snubbed the US bank for its involvement in the 1MDB scandal—Goldman Sachs is making a push into Saudi Arabia.
Tuesday 10, September 2019
Goldman Sachs Group is tapping its upper ranks to navigate a notoriously complicated region where it has stumbled of late, reported Bloomberg.
Chief Executive Officer David Solomon has turned to international banking head Richard Gnodde and former Donald Trump adviser Dina Powell to help lead the push and they are said to have all spent months wooing top officials in the Kingdom, vying for a slice of the world’s biggest initial public offering (IPO)
The charm offensive is paying off, the bank is considered one of the strongest contenders to get a lead role on the state-owned oil giant’s mammoth offering. The deal promises to open the door to more lucrative mandates as the nation opens up to foreign investment and plans to privatise hundreds of state assets.
Saudi Arabia is becoming the focus of Goldman Sachs’ Middle East strategy after the fallout from the 1MDB corruption scandal marked its abrupt downfall in Abu Dhabi, once one of its most lucrative markets in the region.
Global banks such as JPMorgan & Co. and Credit Suisse Group are investing in Saudi Arabia as it promises some of the world’s biggest deals.
Goldman Sachs had been the go-to bank for many of Abu Dhabi’s top dealmakers but has missed out on billions of dollars of deals after being sued by two of its investment funds.
The bank is accused of misleading investors when it helped 1MDB raise $6.5 billion through bond deals in 2012 and 2013, while allegedly knowing that the funds would be misappropriated. The firm has denied culpability in the scandal and laid the blame on Tim Leissner, a former partner who has pleaded guilty.
Abu Dhabi’s Mubadala Investment Company publicly blacklisted the bank earlier this year, while a number of local lenders and state bodies have informally stopped doing business with the bank.
The US bank advised on the listing of Abu Dhabi National Oil Company’s retail distribution unit in 2017 that raised $851 million and worked with Mubadala on the planned $3 billion IPO of its Emirates Global Aluminium unit.
Goldman was also involved in a deal to raise $1.2 billion in bonds for a cluster of airlines linked to Etihad Airways.