Aramco's Acquisition of a 10% Stake in HORSE Powertrain Limited
Overview of the deal
Acquirer: Saudi Aramco
Target: HORSE Powertrain Limited
Implied Equity Value: €7.4 billion enterprise value
Total Transaction Size: Based on a 10% stake acquisition
Closed Date: H2 2024 (Expected)
Acquirer Advisors: [Not disclosed]
Target Advisors: [Not disclosed]
On June 28, 2024, Aramco signed definitive agreements to acquire a 10% equity stake in HORSE Powertrain Limited, the newly established global powertrain solutions company formed by Renault Group and Geely. With this investment, Aramco joins Renault and Geely as a strategic partner in HORSE, which aims to lead advancements in low-emission automotive powertrain technologies, including hybrid systems and alternative fuels.
Company Details (Acquirer - Saudi Aramco)
Aramco is one of the world's largest integrated energy and chemicals companies, known for its leadership in crude oil production and exports. The company is also heavily investing in innovative technologies to support the global energy transition.
Founded: 1933
Headquarters: Dhahran, Saudi Arabia
CEO: Amin H. Nasser
Number of Employees: ~70,000 (2023)
Market Cap: $6.75 Trillion
TTM Revenue: $1.83 Trillion
TTM EBITDA: $879 billion
TTM EV/Revenue: ~3.68x
TTM EV/EBITDA: ~7.28x
Company Details (Target - HORSE Powertrain Limited)
HORSE Powertrain Limited, formed as a joint venture between Renault Group and Geely in May 2024, specializes in the design, production, and innovation of advanced powertrain technologies. The company’s focus spans hybrid powertrains, alternative fuel systems, and synthetic fuel solutions to drive a sustainable future for the global automotive sector.
Founded: 2024
Headquarters: London, UK
CEO: Matias Giannini
Number of Employees: ~19,000
Market Presence: 17 global plants across Europe, China, and Latin America
Annual Production Capacity: 5 million powertrain units
R&D Centers: 5
Projections and Assumptions
Short-Term Consequences
Aramco’s acquisition of Horsepower Train Technologies occurs during a global transition toward clean energy and sustainable transportation. This deal positions Aramco as a key player in automotive innovation, allowing it to capitalize on the growing demand for hybrid and electric vehicles.
The automotive powertrain market is projected to grow at a CAGR of 6.2% from 2024–2030, driven by global efforts to reduce greenhouse gas emissions. By integrating Horse Power Train’s expertise, Aramco is expected to bolster its research and development capabilities, expand its footprint in Europe and Asia, and attract automaker partnerships seeking sustainable powertrain solutions.
Long-Term Upsides
This acquisition provides Aramco with significant opportunities to:
Diversify Revenue Streams: As global oil demand plateaus, the powertrain business offers a growing alternative.
Strengthen Market Position: Aramco can establish itself as a leader in the low-carbon transportation market by leveraging Horse Power Train’s innovations.
Capitalize on EV Growth: The global EV market, valued at $250 billion in 2023, is projected to surpass $1 trillion by 2030, presenting a lucrative market for powertrain solutions.
The geopolitical emphasis on reducing fossil fuel reliance also creates opportunities for Horse Power Train to expand its partnerships with governments and automakers transitioning to sustainable mobility solutions.
Risks and Uncertainties
Market Volatility: The global EV market is highly competitive and subject to technological disruptions. Horse Power Train must innovate continually to maintain a competitive edge.
Economic Dependencies: Global economic conditions, such as inflation and supply chain disruptions, could impact demand for automotive solutions.
Integration Challenges: Merging Aramco’s oil-driven legacy with Horse Power Train’s technology-focused approach may pose organizational and cultural integration challenges.
Regulatory Risks: As environmental regulations evolve, both companies must ensure compliance while managing costs associated with transitioning to greener technologies.
“This acquisition reflects Aramco’s commitment to a more sustainable future. Horse Power Train’s cutting-edge innovations will complement our strategic vision, enabling us to deliver advanced mobility solutions that support global efforts toward carbon neutrality.”
— Amin H. Nasser, CEO (Aramco)
