In a move that underlines the appetite of Gulf state investment funds for investments outside home markets, Saudi Basic Industries Corporation, the largest public company in the Middle East, is preparing a bid for General Electric’s plastics division in a deal that could be valued at up to $12bn.
Sabic has appointed Citigroup to prepare an indicative offer ahead of the first round of the auction in mid-April. Sabic, 70 per cent-owned by the Saudi government, is one of the world’s 10 largest petrochemicals manufacturers. Last year, it paid $700m in cash for the UK-based European Base Chemicals and Polymers business of US-based Huntsman Corporation.
GE expects a mix of trade and private equity bids for the division. Financial sponsors are keen to win the asset because the stable cash flows lend themselves to high levels of gearing. Among those bidding are Blackstone, which has teamed up with privately owned Koch Industries. It will face competition from buy-out firm Apollo, which last year acquired GE’s $3.8bn advanced materials business.
Separately, KKR, Carlyle Group and Bain Capital are thought to be planning first-round offers. Strategic players that have signalled an interest include Reliance Industries, India’s largest listed group, and Basell, the plastics maker owned by Access Industries of the US and India’s Chatterjee Group.