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* Flagship forum to showcase Saudi future away from oil
* Diversification slow to take off as investors remain wary
* More participants expected than last year's event
* Aramco IPO still biggest attractionBy Davide Barbuscia, Saeed Azhar and Stephen KalinDUBAI, Oct 25 (Reuters) - Wall Street's heavy hitters areback in Saudi Arabia but the terms of engagement have changed.The CEOs of Citigroup and Credit Suisse , aswell as the heads of fund managers BlackRock andBlackStone will be among those gathering in Riyadh nextweek for a glitzy investment conference, an event not attendedby top financiers last year after the murder of Saudi journalistJamal Khashoggi.
SoftBank founder and CEO Masayoshi Son will alsoattend the Oct 29-31 conference, two people familiar with thematter said, as the Japanese company seeks to raise funds for asecond technology fund. The Saudi sovereign wealth fundcontributed $40 billion to Softbank's first technology fund. But the buzz around the Future Investment Initiative (FII)has faded since the conference was first launched in 2017, whenit was heralded as Davos in the desert, a nod to the annualgathering of world leaders and corporate bosses in the SwissAlps.Then, Saudi Arabia was being feted for its investmentopportunities and Crown Prince Mohammed bin Salman was hailed asa force for change.Now, fallout from Khashoggi's killing and the stop-startprocess towards the long-awaited stock market listing ofstate-run energy giant Saudi Aramco have shifted the mood."It's not seen as a must-do event like Davos," said onebanker at an international bank.The country has struggled to lure foreign investment to fundprojects outside the oil sector, including manufacturing, meantto create millions of jobs for Saudis, as investors hesitateover the commercial viability of projects and Riyadh's humanrights record.Proceeds from Aramco's initial public offering will boostthe Saudi wealth fund's ability to back domestic mega-projectsincluding the $500 billion futuristic city NEOM, announced atFII in 2017.But there has been little progress on NEOM so far other thanconstruction of royal palaces and an airport. A NEOM companyspokesman said it continues to engage with a "wide range ofpotential foreign and local investors". Saudi Arabia has managed to sign some multi-billion dollardeals last year at the conference, but it was Aramco thatclinched most of them."Signing commercial agreements is great for PR, but whatSaudi Arabia really needs is for many of its nationaldevelopment initiatives to move from the conceptual stage toimplementation with foreign, private-sector partners," saidRobert Mogielnicki, resident scholar at Washington-based ArabGulf States Institute.For FACTBOX on Saudi Arabia's key reforms: For FACTBOX on non-oil deals since 2016: ARAMCO'S ALLUREAramco's IPO, for which Prince Mohammed is seeking a $2trillion valuation, remains the biggest draw in Saudi Arabia forinvestors.The company was due to announce plans on Oct. 20 for aninitial 1%-2% flotation on the Saudi stock market, a listingthat could be the biggest ever depending on the valuation.
But this has been delayed. An adviser told participatingbanks that Aramco wanted to wait until its third-quarter resultswere published to bolster investor confidence following attackson the company's plants last month which halved Saudi Arabia'scrude output. Sources also told Reuters more time was needed to lock incornerstone investors for the listing. The country's privatisation drive looks far from reaching atarget of 35-40 billion riyals ($9.33 billion-$10.66 billion) innon-oil state revenues by 2020 based on deals so far.A spokesman for Saudi National Center for Privatization &PPP said five public-private partnership infrastructure dealswere closed since last December that involve more than 13billion riyals in new investment in the next two to three years."The opportunities to date are largely in listed equitiesand direct investment, and the privatisation or IPOs have beenlimited to the oil and gas sector," said Richard Segal atManulife Investment Management.Prince Mohammed has courted Silicon Valley with visits tocompanies including Facebook and Microsoft in2016 and 2018. He has not visited a Western capital sinceKhashoggi was killed.Apple and Amazon were in talks in 2017 toset up a presence in Saudi Arabia, sources said at the time, butno deals have emerged.
Asked if they would attend next week's conference, Facebookand Apple declined to comment. Google and Amazon didnot respond to a request to comment.The CEO of German conglomerate Siemens will notattend due to other commitments, a company spokesman said. SouthKorea's Samsung will be represented by its CEO and will sign amemorandum of understanding with Saudi entertainment resortQiddiya at the event, Qiddiya said.The White House, which has resisted pressure to punishRiyadh over human rights abuses citing its strategic importance,is sending its U.S. energy and treasury secretaries Rick Perryand Steven Mnuchin and senior adviser Jared Kushner. While last year's event was dominated by leaders from Asianand Arab countries, next week's gathering will include Brazil'sPresident Jair Bolsonaro and India's Prime Minister NarendraModi.David Malpass, the head of the World Bank - which did notattend last year - will also be there.
"FII may be an immediate reality check, but the real test ofinvestor confidence in Saudi Arabia will involve a longer-termassessment of foreign direct investment trends, commercialregulations, and transparency measures," Mogielnicki said.
($1 = 3.7507 riyals)<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^FACTBOX-Major Saudi Arabian non-oil deals since 2016 FACTBOX-Saudi Arabia's key economic and social reforms ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Alexander Cornwell and Hadeel AlSayegh in Dubai, Stanley Carvalho in Abu Dhabi, David Lawder inWashignton, Pamela Barbaglia in London, Sam Nussey in Tokyo;Editing by Ghaida Ghantous/Carmel Crimmins/Jane Merriman)