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Singapore’s Temasek rules out investment in Saudi Aramco IPO

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Temasek’s stance highlights a growing risk facing fossil-fuel producers, an increasing number of developed-market funds are under pressure to avoid investments that directly contribute to climate change.

Thursday 10, October 2019

Singapore’s Temasek Holdings has decided against investing in Saudi Aramco’s initial public offering (IPO) over environmental concerns, reported Bloomberg.

The state-owned oil company first flagged a public share sale in 2016 and is expected to list with a valuation of between $1.1 trillion to $2 trillion later this year. Saudi Aramco has been courting funds globally to act as cornerstone investors, including Temasek, which had a net portfolio value of SGD 313 billion ($227 billion) as of 31 March 2019.

Temasek’s focus on sustainability and environmental, social and governance (ESG) principles made it more difficult to support Saudi Aramco’s share sale. The company has a 2030 goal to reduce the carbon emissions of its portfolio companies by 50 per cent.

The company highlighted ESG assessments are a key factor in its decision making, alongside commercial considerations.

Temasek International Chief Executive Officer Dilhan Pillay was more direct last month when asked about which investment areas the company was avoiding as part of its focus on sustainability.

Saudi Aramco’s IPO is expected to be the biggest in history. People involved in the transaction say about two per cent of the company may be sold, which could raise $40 billion for the oil producer.

However, some investors may find the price to be excessive, given the weak oil market and the push by many nations to cut their reliance on fossil fuels in favour of electric cars and renewable energy.

 

TAGS : Temasek Holdings, Saudi Aramco, initial public offering, ESG

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