Narrow set of options

Welcome to the latest edition of Riyadh Bureau, a newsletter for people interested in Saudi Arabia — written by me, Ahmed Al Omran. If you are not a subscriber, please use the button below to subscribe. Send your feedback to or via Twitter: @ahmed

Sad bankers

Almost 5 million people have applied for shares in Saudi Aramco’s initial public offering with a total value of 47.4 billion riyals as the retail tranche came to an end on November 28, while bids from institutional investors have reached 119 billion riyals so far with few more days to go for them to submit bids until December 4.

This brings the total to 166 billion riyals which means it has been oversubscribed and raised 1.7 times what the government said it wanted, but this is still far less than what we have seen with previous Saudi share sales. The National Commercial Bank IPO in 2016 was covered 23 times over, while 10 million Saudis participated in Emaar IPO in before the stock market crash in 2006.

Only 10.5% of bids came from non-Saudi investors after the company decided not to market the flotation abroad due to lack of appetite from foreign institutional investors over the valuation and other concerns, but Saudi Aramco executives have traveled to Kuwait and UAE as their sovereign wealth funds are expected to invest.

King Salman highlighted the importance of the IPO for economic reform plans in a speech he delivered before the Shura Council on November 20 and the government will tout the process as a success, but this has been a long and difficult journey as the Wall Street Journal detailed in their backstory on how we got here:

The much-reduced ambition and domestic listing on Saudi’s Tadawul exchange have frustrated investors and bankers who say Aramco is now only selling at that size to try to break a record. Bankers working on the deal recommended pricing Aramco’s valuation far lower to attract international buyers, but Prince Mohammed balked at going lower than $1.6 trillion.

The long process has been frustrating for bankers on the deal who started attacking each other in the days leading up to opening the subscription period. The Financial Times reported:

One accused a rival of having “whored themselves on the price range” while others spread stories of peers being castigated by Saudi officials. Another banker said: “There is real tension in the syndicate. These deals take on a dynamic and everyone turns on each other.”

Seeing the prospect of years of work disappearing over the horizon, they are increasingly philosophical about the deal’s degeneration into, what one banker called, a “Greek tragedy”.

Regardless how bankers feel, the government can now call it a victory and move on. “Saudi Arabia does not have to sell a single Aramco share, but the idea itself reflects a different approach to state administration,” Abdulrahman al-Rashed wrote. “That is something that any visitor who knows Saudi Arabia will verify — the country is changing in all aspects of life.”

Riding the de-escalator

Geopolitical risk as seen in last September’s attacks on Saudi Aramco’s facilities was cited by investors among the reasons for their lower valuation. The attack was seen as a result of the US “maximum pressure” campaign against Iran and exposed the vulnerability of Saudi infrastructure on the Gulf, prompting the kingdom to take a measured approach in their response amid a narrow set of options.

But observers also pointed out to a series of self-inflected Saudi domestic and foreign policy missteps over the last few years, like the Yemen war, the boycott of Qatar and the killing of journalist Jamal Khashoggi as additional factors that have made overseas investors reluctant to make a bet on the kingdom’s reform project for which the Saudi Aramco IPO is a cornerstone.

Saudi Arabia has been in recent weeks pushing what officials describe as a deescalatory approach to issues in the region. The coalition announced recently the release of 200 Houthi prisoners as part of a new effort to end the conflict, and we are finally seeing some movement to resolve the Gulf crisis as the Kuwaiti and US mediation appears to be bearing fruit.

This has started with a bit of sports diplomacy: National football teams from Saudi Arabia, UAE and Bahrain traveled to Qatar to participate in the Gulf Cup despite earlier signals that they would skip the tournament. (Fun fact: the Gulf Cup is actually older than the Gulf Cooperation Council. The football tournament started in 1970 while the GCC was founded in 1981)

Qatar’s foreign minister has reportedly made an unannounced visit to Riyadh last month and said Doha is willing to sever its ties with the Muslim Brotherhood. Al Jazeera has also appeared to tone down its coverage of Gulf neighbours in recent weeks, and Bahrain foreign minister said he expects Saudi Arabia to soon announce a date for the next GCC summit which will now take place in Riyadh instead of Muscat.

The optimists say we are closer than ever to bringing this dispute to an end even as hardliners in Riyadh and Abu Dhabi continue to play down any potential resolution by insisting that Qatar cannot be trusted. That division is easily visible as you read cryptic (and not-so-cryptic) posts by media figures connected to the three countries on Twitter, but a solution seems more likely than not at this point.

Dark clouds

Speaking of Twitter, the social media company has again found itself at the centre of another Saudi controversy after the US Department of Justice this month accused two former employees and another Saudi citizen of spying for the kingdom.

The New York Times last year exposed the role of one of them, Ali al-Zabarah, who used his position inside the company to access private information of government critics. Western intelligence agencies alerted Twitter about him at the end of 2015 and he left the company shortly after that. The new case sheds more light on the roles of Ahmad Abouammo, a Lebanese-American who oversaw Middle East media partnerships for the company and Saudi national Ahmed al-Jbreen.

Al-Jbreen is the founder of Smaat, a social media agency that has done extensive work for the Saudi government since it was established in 2012. According to court documents, he is accused of acting as a go-between for Saudi officials and the Twitter employees. A senior Saudi official has declined to give detailed comment on the allegations when he met reporters in Washington in early November but added that “we expect all our citizens to abide by the laws of the countries in which they live.”

While Abuammou was arrested in Seattle (and later released after a US District Court judge ruled that he may be freed pending trial), al-Jbreen appears to be going about his life normally in Saudi Arabia. Twitter has suspended his account but he continues to post almost daily on Snapchat, sharing moments from desert trips and giving his followers tips about how to deal with stage fright.

Effort by authorities to control and manipulate social media has been effective in the sense that it has stifled debate and forced many of the vocal writers and intellectuals during the Arab Spring years to go silent. Despite their silence in recent times, some of these people were briefly arrested last week. Most of them were released on bail and it remains unclear if they are facing any charges.

The latest wave of arrests suggests that the crackdown on any potential dissent domestically would continue even as Saudi Arabia is promoting its “deescalation” message abroad as the kingdom takes over the G20 presidency. Few days earlier, the Twitter account of State Security posted a video labelling feminism as one of the extremist ideologies. Local daily al-Watan wrote a story about the video and quoted a lawyer who said feminists could face lashing and jail time.

State Security backtracked after the news went viral. An official statement said posting the video was a mistake and it has been deleted. State Security also said it has taken action against the newspaper for publishing fake news. The story is no longer available on al-Watan’s website.

That is all for this dispatch from Riyadh Bureau. Thanks for reading! You can send your feedback by email: If you enjoy this newsletter please do share it with others.