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Moelis keeps hand extended to Saudis as rival bankers pull back

Oct 24 2018 08:50
Matthew Martin and Dinesh Nair, Bloomberg

Ken Moelis showed up.

The founder and chief of his eponymous investment bank traveled to Riyadh to extol the virtues of friendship. He stood out as many of the titans of U.S. finance sat out the kingdom’s signature investment summit amid international outrage over the killing of government critic Jamal Khashoggi. As the conference kicked off Tuesday, Turkish President Recep Tayyip Erdogan told his lawmakers he rejected the Saudis’ explanations for the Washington Post columnist’s death in their consulate in Istanbul.

Speaking on a panel that included the head of Russia’s VTB Bank, which is operating under U.S. sanctions, Moelis told the audience in the crowded conference room at the Ritz Carlton Hotel that relationships are a company’s most valuable asset - even if there’s no way to account for them on the balance sheet. He subsequently declined to answer reporters’ questions.

His appearance underscored the dilemma faced by those who decided to avoid the gathering, including U.S. Treasury Secretary Steven Mnuchin.

No Shows

Bank of America’s Chief Operating Officer Thomas Montag and Evercore Chief Executive Officer Ralph Schlosstein were the latest to bail on the event - the brainchild of Saudi Crown Prince Mohammed bin Salman to showcase the kingdom’s investment opportunities. Others who didn’t show included the chief executives of some of the Saudis’ main financiers and business partners: Blackstone Group LP’s Steve Schwarzman, JPMorgan Chase & Co.’s Jamie Dimon, HSBC Holdings’s John Flint and BlackRock’s Larry Fink.

While those executives head firms with the balance sheet and history to weather any potential storm, Moelis, 60, leads a boutique investment bank with fewer than 1 000 employees.

Winning a 2017 mandate to advise on the planned initial public offering of Saudi Aramco was a coup that promised Moelis & Co. its biggest payday ever. While the date for the largest-ever IPO has receded into the future, the mandate earned him the nickname "Ken of Arabia".

Most financial firms opted to send regional executives to the conference as they attempt to walk a fine line between the risks of stoking the outcry over the killing and losing future businesses in Saudi Arabia. Samir Assaf, who heads HSBC’s investment bank, is also set to take part in the summit, according to a person with knowledge of the matter. HSBC declined to comment.

Saudi Arabia’s 33-year crown prince, known as MBS, has come under pressure since the government acknowledged after days of denials that a group of his intelligence officers had killed Khashoggi. While global business titans commended MBS last year for his ambitious plans to transform the economy of the world’s biggest oil exporter, top executives from outside the banking sector are also skipping the conference this time.

Key executives who are participating in the summit or are scheduled to do so:

Patrick Pouyanne, CEO of Total SA Lorenzo Simonelli, CEO of Baker Hughes Paal Kibsgaard, CEO of Schlumberger Ltd. Loh Boon Chye, CEO of Singapore Exchange Ltd. Kirill Dmitriev, CEO of Russian Direct Investment Fund Jim Breyer, CEO of Breyer Capital Alberto Galassi, CEO of Feretti SpA

Saudi Arabia has signed more than 25 deals ranging from petrochemicals to metals as it tries to salvage its forum, including accords with French oil giant Total SA, oil-services provider Halliburton Co. and Hyundai Heavy Industries Co. Some of the deals, totaling about $50 billion, had been announced previously, while others were for new ventures or marked progressive steps on existing agreements.

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