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Aramco’s huge chemical buyout loads Saudi Arabia’s coffers

Aramco, Saudi Arabia’s giant oil company, announced yesterday that it had bought 70 percent of the kingdom’s state-controlled petrochemical company, Sabic, for $69.1 billion.

This is an alternative to an Aramco I.P.O. The deal for a majority stake in Sabic will provide a windfall for its majority owner: Saudi Arabia’s sovereign wealth fund. Aramco’s postponed plan to sell some of itself on a public stock market would have accomplished something similar.

Saudi Arabia now has the money it wanted to modernize its economy. The kingdom’s crown prince, Mohammed bin Salman, hopes to fund a campaign to wean Saudi Arabia off oil, by investing in new technology and clean energy. Aramco has now given his government the billions required to do so.

And banks still get a gusher of fees. Financial firms that had worked on an Aramco I.P.O. pivoted to advisory roles on the Sabic deal, and many will arrange what’s expected to be a huge bond sale to help finance the transaction.