Where crude prices are heading. Arabias investment fun have announced fund has toounced investment plans grow the fund to 2 trillion. Currently we have 90 local domestic, 10 international. These are deployed investments. I think this number will continue. We will have cash inflows coming in, so we are growing our portfolio, and that is one of our objectives, the growth of our portfolio. 2025 the percent will be coming out in the international from less than 10 to about 25 . 25 , and where is that cash coming from now . We know you will get some money from the aramco ipo. That is a good start. The investments that we have today, it is basically all liquidity. We need to look at leverage. That is what everybody is doing. Thesel be limited to things. If we are in one project, we can use down the line the project as a base for the leverage with no recourse to the rest of the portfolios. How do you plan to love her up . Lever of . How much leverage do you plan on using . We hired a new treasury and head of corporate finance. That is part of his mandate. He will come in and about a month or so. That is one of the questions we will be asking him, and hopefully we will have a better answer then. Do you think you want to onetimes, lever up two times . One. In what neighborhood . We are still working on our strategy. Conceptually, we have it, but the numbers are yet to come. That is with the intent of improving returns . Absolutely. You have also made investments in individual companies, uber for example. Are you going to continue doing that kind of thing . Yes, we will. It is not only uber we have done direct investments with. It was a big ticket item. It was not small. I think we will continue if we see good opportunities definitely we will continue. Andave a good process governance and processes and people, so the number of people in 2015 was less than 16. Today it is 200. In the coming two years it will be 500. 2020 five, we will be over 1000, so the number is growing, in addition to the advisors we are working with. Saudi,re advisors from gcc countries, new york, everywhere. If you look at the brainpower and muscle car have, it is going big, but we are not to go to the direct investments until we are more comfortable. Now is companies right enough, but in the future i think we will see more. That was the ceo of the Public Investment fund. A couple of things that struck me, we have been talking about the reform process. They will increase foreign holdings. The approach has the a lot more aggressive with leverage. Who would have thought they would be talking about leverage . They have few choices. I say that because if returns are where they are today and in this case it is 4 . They have to find a way. 4 is not enough to meet the needs of the future generations of saudi citizens. Increasee looking to returns, you have a small number of options. You can go higher up on the risk is doing thatpif by investing 45 billion dollars with softbank and 20 billion with blackstones infrastructure fund. The hope is those investments will generate higher rates of returns, but they cant allow all of their money into higher risk investments because they cant afford to risk it all. They still have this gigantic domestic portfolio generating lower returns, so the only thing after that is leverage. That should bring a few alarm bells because leverage is a doubleedged sword. It can increase returns, but it can also increase losses. Forces,up next, joining a joint venture deal with aramco may be signed this year. Our interview is next. This is bloomberg. The ceo of sabic is one of the Worlds LargestChemical Companies says he is optimistic about the opportunities the modernization plans will bring. He expects toan sign a joint venture deal with aramco as soon as this year. I think this is the best formula to take advantage of it to achieve sabics growth strategy. We have been able to make announcements about three Major Projects to support our growth engine. The first one is Saudi Aramco Oil to chemical, and the second one is with exxon mobil in the u. S. For leveraging the shale gas in addition to one of our transformations going into china. These are projects that will fuel the growth of sabic. Going into 2030 vision has ring this transformation to a level where sabic will leverage the 2030 vision and play a major role in it. Yousef one of the relationships you have strengthened is saudi aramco. And saudi aramco are interesting for foreign investors. How will the relationship intensify as it comes to the oil to chemicals plan . This is a strong Strategic Partnership where sabic and aramco leverage their competencies. Aramco is the Number One Oil company with a strong background. Sabic is also one of leading companies and petrochemicals. Towill bring both competency a level where we can complement each other. I am confident this project by the end of this year will be able to sign the jv agreement and take it to the next level. Yousef is this a way to cooperate and protect yourself from volatility and commodity prices, especially oil . Perspective oil prices always have an impact on our industry. Has assets in europe, the u. S. , and china, and naphthabased and sometimes when the crude oil prices down, we get to a point where sabic is managing its risk portfolio globally to provide the right balance for our shareholders. That is not only the objective we drive. Portfoliok at sabics we have strengthened our business on the specialty side because specialty has less implication on the crude oil price. In order to give shareholders some stability yousef that is a key point because Oil Price Volatility is a major risk for sabic. Are you confident oil prices will be more stable in 2018 . Longterm we look at based on the export view, the oil price will remain at the current level for 2018, but let me highlight very important elements for sabic. We look at external factors and try to analyze them, but cannot predict what the crude oil price will be. What we can predict and control is how we make our plans reliable and bring differentiated products and solutions to our customers that can bring higher by you for our company. Yousef what about demand when it comes to petrochemicals, plastic products, steel . In terms of commodities, plastic, there is a healthy demand for 2018. The global gdp growth is improving right now. So manyerica, there are positive sentiments, including the trump tax reform. If you look at china, after the National Congress, 19th National Congress in china, a longer term for china demand in addition to europe. These are all in my view very positive signals for 2018 with healthy demand. Yousef in our past conversations you have said acquisitions were high on your list of priorities. It is one of our top parties in terms of growth strategy. Forave made an announcement our jv with exxon mobil and some opportunities we are entertaining at this point. Yousef to bring it closer to home, are you planning to cap the debt tap the debt markets . The shortterm, but 2018 will be active for sabic in terms of growth. It could be organic or nonorganic, and i think this is the time we go into the market to raise capital to support our growth strategy. Yousef it sounds like you have a war chest ready to go. How big is your war chest . How many billions are you willing to spend . I can assure you we have a strong Balance Sheet and sabic has no challenge to raise debt. This will be determined about the opportunities, thoug visibility for sabic. Yousef what are you doing to mitigate the rise in prices and deal with the new reality and saudi arabia . Take this Energy Reform policy positively because this will push the producer to become more efficient and this is the objective. They would like to see our industry are using the energy in an efficient way. We are do with it, trying to reorganize our organizations and plans and would like to make sure there to synergize our assets and reduce our costs and make sure we have the right portfolio moving forward. I think with the increase in 2016, sabic will be able to perform very well and able to additional costs, so there are always opportunities for a company to make a better efficiency. Howver, also, i think regulators will look at the competitiveness of our industry rather than the stock price. I am confident the petrochemical industry will remain competitive. susef up next as Abu Dhabi Sovereign Wealth Fund sets up an office, the ceo is eyeing investments in the u. S. Tech industry. That interview is up next. This is bloomberg. Abu dhabis Sovereign Wealth Fund is widening as it looks to lessen its reliance on oil. Mubadala investment said it was setting up a Silicon Valley office. Bloomberg asked the ceo Khaldoon Al Mubarak whether he is in talks to buy stakes in u. S. Firms. Yes, the answer is yes. We have been looking at opening this office for a while now. To be honest from a strategic perspective, mubadala we resisted over the years and try to centralize our operations in abu dhabi and use Subsidiary Companies around the world has entry points into these markets. ,ver the last couple of months especially after our relationship with softbank, it became clear that we need to go deeper, and to go deeper, we need to be closer to the market and in San Francisco and Silicon Valley. That decision six months ago and have been working the last six months and preparing many investments in that sphere. Entitye is another making tech investments, the Public Investment fund in saudi arabia. His their scope for you to Work Together with the saudis when it comes to tech . Together iny worked the softbank fission fund, so we are technically partners already in that sphere. We have a great relationship. They are a good partner. We considered them a strategic artwork. Through that relationship and others we are exploring other investments both in technology, but in real estate, etc. Invest in saudi arabia, and saudi arabia is a tremendous market. You see the potential this country has. It is a country we have not invested in the past in, but is on our radar screen and we spend a lot of time looking at the best avenues for investment in saudi arabia. What investments or geographies are you focused on . Portfolio a diverse in jericho fee and sectors. In geography and sectors. We have been doing a lot in aluminum to semiconductors to oil and gas, petrochemicals, where we have significant exposure to today and healthy portfolios. Technology is an area we are heavily investing in. Example,for satellites, data centers come also expanding into sectors we have never invested in in the past such as agricultural, biotech. In terms of geography, we have been heavy in terms of north america, europe, western hemisphere. We have been pivoting by investing more in asia, china is an area we have been focusing on lately. New markets, pressure for the last couple of years come also successful in terms of rates of return in russia. I would say south america is another area we started to explore and get good traction with an deals flowing in that area. Of the day, we have a large portfolio and our objective is to maximize the rate of return and open our eyes to new markets where we see growth opportunities. You mentioned maximize rate of return and the aluminum business. Where will we see a listing of that . I think soon. Solid business the last couple of years. Inces have rebounded well 2017. The trajectory ford is positive. The company is in good standing. The trajectory ford is positive. The company is in good standing. Strong production heritage with highquality aluminum to customers all over the world. So the business is healthy and in a good situation. We are preparing ourselves to go public. The mostion will be opportune time in terms of the markets, but you should expect this within the next 12 months. In the next 12 months . All right. A centerpiece example of consolidation within the middle , is, especially abu dhabi there more consolidation to come in abu dhabi . Consolidation has to happen when it makes sense. Over the last couple of years, we have seen some very positive consolidations in the market as a whole and specifically in abu sector, the Investment Banking sector, industrial sector. I have been fortunate to be involved in all three examples i just gave. Positiveme has been for shareholders and positive from a valuation perspective. Are there going to be more consolidations . I dont know. I hope so. I am a supporter of that and think it makes a lot of sense. Come, aiming to high, the ceo of blackstone says hitting seven train dollars and assets one tree and dollars in assets is possible. This is bloomberg. The cofounder and ceo of investment giant blackstone said assets may double over the next five years. Even 1 trillion is possible. This as saudi arabias Public Investment fund announced its growth plan. If he Stephen Schwarzman thought more money would be flowing from the kingdom to his company. We have 400 billion without pif. As we expand come there is certainly scope because we grow 10 a year, actually sometimes a lot more. We started a variety of new businesses, so there is a real opportunity for many people to be investing with the firm. I dont think their scale is of interest in terms of innovation. Thereason i ask about the reason i ask about the pif, is there another firm that has risen a single 20 billion check to blackstone . Not. Obably in saudi arabia has so much more it will need to invest. The crown prince has talked about 2 trillion in the next 15 years in the pif. That is why i am interested in that relationship between the pif and blackstone. I think these things will happen slowly actually. They will take saudi aramco public. That will be a next year event towards the end of the year as it is scheduled, depending upon markets. They will have other mandates they need to fund, so i dont pif withe growth of withched outstretched the ability of blackstone to keep growing. Part of what we do is start new businesses, new investment areas , and there is also plenty of room in what we do generally. I think pif will have a series necessarilyns, not at a 20 billion level, but the theory of the cases to try to find the best managers in the world and have relationships, partnerships, with them as opposed to some Sovereign Fund with 300 alternative Investment Managers you give money to. Pif will be more concentrated. How else do you think you can help the pif . It is saudi arabia in general, the new city they are doing and advice outside investment to the kingdom is interesting to me personally. Veryrown prince is a dynamic person. I met him in new york a yearandahalf ago. I think it was one of two people in yorkie met with. He laid out this whole vision cities, three new liberalization, the types of things people look at saudi and say, why are they still doing things like that . He has a population, 70 is below the age of 30, said the fact he is close to their age is interesting come a but he is a energetic, very visionary person. Being involved with someone like that on a personal basis as well as institutionally is really fascinating. You mentioned that blackstone is starting a number of new businesses. I know about infrastructure. That is the business into which the pif is investing. What else is blackstone doing . More to come. Are you being cagey with me . Not cagey at all, quite direct. One thing with finances there are no patents, so when we do things we find there is an echo do our ownd like to research, figure out where we are going, then go there with enough time so we have a lead on other people. Let me try to push a little bit. It is clear the pif and other Sovereign Wealth Funds including singapores gic are targeting high returns by targeting tech and health care, directly or indirectly. Blackstone cant help there, at least not yet. Does that create an opportunity for blackstone to start investing at an earlier stage . There are a variety of alternatives for returns. We do some of those investment areas, but dont do them in like we funds, just have done for example 40 billion of infrastructure with extremely high returns, and i am allowed to say that because we are marketing a fund, sec rules, but we find a way to accommodate initiatives into those types of areas and others. So would you consider doing specific funds that would invest in companies at an earlier stage in their life cycle . Some of that,do so would we consider it . We would basically consider just about everything. We only do things where we think we have a competitive advantage. And also, with scale, right . Thats another thing you believe in. I am a great believer in scale. It has worked out for us in many of our businesses. The ability to have scale and it was you to operate globally, enables you to obtain more and more intellectual capital, and it provides some degree, depends on the business area, a moat for us. Like tactical opportunities . Businesses that did not exist for blackstone five years ago. What is the next scale business for blackstone beyond infrastructure . I admire your tenacity. The reason i ask is because that is something you already have to be in. Furthernot going to go on what i would say. ,he firm started with no money 400,000 in capital. Almost 400 billion and a market capitalization somewhere on the north side of 40 billion, so we are and innovation factory. We are always looking for something that is new, that is breaking, where we can deliver really remarkable returns to our investors. We only go there when we can do that. We are not in the asset gathering business. We are in the return providing business. Opportunitiese that you see to generate returns for your investors, let me ask you this question. Nowledging that you do not are not in the asset gathering business. You and i were talking when blackstone managed 200 15 billion in assets and you told me you could easily see the firm growing based on the opportunities its all to 500 billion. You are almost there. Based on what you see today, what is the new number . Could it be a 1 trillion firm . That is possible. We have internal targets, plans, aspirations to basically double where we are, which would take us to about 800 billion. Over what. Iod of time. Five years. We have not finished our plans. We will see if we can accomplish that, but that would be a substantial increase in terms of what we are doing. We always have something in mind where we think we can deliver a product to people who are not getting it, or do it materially better, so we have actually had a lot of fun taking the next generation of people at the firm and putting them to work on that problem. We have had a really terrific meeting with people presenting ideas, and that is how you grow the culture of a business. This is not one person sitting around inventing things. That would be a huge misunderstanding. And we have the firm totally engaged in how we can grow, but crowe with great returns. Grow with great returns. Without providing something unique to investors, there is no reason for a business to exist. That is what we think we are doing. But we are on a mission to be the best firm in the world in our asset class, and if we are not, we wont know it because that is really easy to measure. I know that sounds a little sort of reaching, but that is what we do, and that is the standard. Can we do the best for our investors . And that provides the growth. Up next, total confusion come the ceo of the french oil measure says he has no idea where crude oil prices are heading. Here our exclusive interview next. This is bloomberg. Says hethe ceo of total has no idea where the price of oil is heading. He does think extending the cuts is a good idea. Here is my interview with him. Market, we have to three years of supply, inventories went high, so you manage to rebalance, which means some drawdown in 34 months. Whatnk when i look to happened between saudi arabia and russia, both countries are committed to rebalance the market, and i think they need to send a strong signal to the market that this will last for long. Week, theutin last historic visit of the king to russia. That is also a signal to the markets. Agreement first is efficient, quite compliant, and should be maintained. Yousef that raises the other question as to how quickly the market will rebalance, and also what that means for prices going into 2018. Is 56. E today people ask when we go to 60, but we were at 44. Were is rebalancing, but know there is seasonal demand. In the summertime Third Quarter is high, so you have some drawdown of inventories. We also know winter, the First Quarter next year, demand will below so inventories go up, and then markets are overreactive. It will take time. It is why we need to have constant policy by opec and other countries. In terms of a range where prices might average in 2018 . I have no idea. I have asked my teams to prepare a 40, 50, and 60. The Main Objective we have is to lower our breakeven. Next year, breakeven will be 30 per barrel. My company is strong and weak can face whatever the price will be. Yousef lets bring it back to the company, lng assets. Them . En are you on buying big player in lng, among the top three. We are willing to grow an elegy. In lng. The cast markets will grow in the future and lng is an air where we would like to develop. Find ansee if we can agreement. If not, we have other ideas and opportunities to develop the lng business. Yousef you say you are quite keen to pick this one up . I did not say that. We are in discussions. We will see if we can conclude or not. We are in discussions on many lng projects in the world, and that is one opportunity we are looking at. Yousef up next, the larger the company, the larger the issues. Thoughts on the saudi aramco ipo next. This is bloomberg. The ceo of euronext says the listing of a company as large as saudi aramco could prove tricky. Nothane boujnah exchange is in the running for the ipo, but says often times the larger the company come the larger the problems can be. First of all, going public through the ipo process is complicated and a date move, even for a small company, so you can imagine when a very big company which is so significant to the wealth of the country over all is going through that process. Some compromises take time to be defined. Company, thelarge andprocess takes longer this is a particular one, so it individuals and constituencies around the situation to find the right compromise, but it definitely cannot the one more ipo. It is a oneofakind. Assef does it strike you unfair that the u. K. Might be bending rules to allow that ipo over there . I have no comment on that point. It is up to the u. K. Regulators to define what are the best conditions they want to offer to this particular ipo, just like any other exchange they would. Ant to welcome aramco they will have to make the same decision. A Large Company creates a larger set of issues to be addressed. Yousef some of your european rivals are in flux. How can you capitalize on that and at the same time make your exchange more friendly as well to potential investors . I guess we are relatively friendly for investors because euronext was ipo to in june 2014 s per share, today at 53 euros per share, so we have been relatively successful so far and have a Clear Strategy we announced in may 2016. We have an Expansion Plan where we want to diversify and open our model, so we are trying to deliver quarter after quarter of what we say we are going to deliver. Yousef the other major change will be the mifid rules. How effective will it be really . One was about opening markets to competition. Mifid two is about increasing transparency, so anything that favors transparency requirements is going to be favorable to markets. Thisf that is it for best of Bloomberg Markets middle east. We will be back next week. I am yousef gamal eldin. Do join me then. This is bloomberg. On bloomberg best, the stories that shaped the week in business around the world cricket president xi tightens his grip on chinas congress. A gamble pays off before shinzo abe. The ecb turns its focus to tapering. The decision today is for an openended program. David some of the financial worlds most important figures. There are places we can invest and improve our market share. I dont think one chilling dollars is too big