Saudi Aramco taps JPMorgan for for world's biggest IPO

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Saudi Aramco taps JPMorgan for for world's biggest IPO

Post by Admin on Thu Feb 23, 2017 10:04 am

Thursday, 23 February 2017
Saudi Aramco taps JPMorgan for for world's biggest IPO


The US banks have joined boutique investment bank Moelis & Co in being tapped for coveted roles in what is expected to be the world’s biggest intial public offering worth US$100bil.
The US banks have joined boutique investment bank Moelis & Co in being tapped for coveted roles in what is expected to be the world’s biggest intial public offering worth US$100bil.
 
HONG KONG: Oil giant Saudi Aramco has asked JPMorgan Chase & Co and Morgan Stanley to assist with its upcoming mammoth IPO and could call on another bank with access to Chinese investors, a source with direct knowledge of the matter said.

The US banks have joined boutique investment bank Moelis & Co in being tapped for coveted roles in what is expected to be the world’s biggest intial public offering worth US$100bil.

HSBC Holdings Plc has emerged as the leading contender for a role among a list of five banks that could provide a pipeline to Chinese investors – an important part of the offering, the source said, adding that the other four are Chinese banks.

The final lineup for banks could still be adjusted, the source said, declining to be identified due to the sensitivity of the matter.

The IPO is the centrepiece of the Saudi government’s ambitious plan, known as Vision 2030, to diversify the economy beyond oil. Up to 5% of the world’s largest oil producer is likely to be listed on both the Saudi stock exchange in Riyadh and on one or more international markets.

Aramco, formally known as Saudi Arabian Oil Co, declined to comment, as did JPMorgan, Morgan Stanley and HSBC.

The Wall Street Journal reported earlier that JPMorgan, Morgan Stanley and HSBC had been selected as lead underwriters.

Citigroup Inc was also among those asked to pitch for an advisory position with Aramco, Saudi-based industry sources said last month.

The IPO plan has been championed by Deputy Crown Prince Mohammed bin Salman, who oversees the country’s energy and economic policies. Last year, he said he expected the IPO would value Aramco at a minimum of US$2 trillion, and that the figure might end up being higher.

Saudi Arabia is considering two options for the shape of Aramco when it sells shares in the national oil giant next year: either a global industrial conglomerate or a specialised international oil company, industry and banking sources have told Reuters.

Saudi Aramco has also appointed international law firm White & Case, which has a long-established relationship with the state oil giant, as legal adviser for its IPO, sources familiar with the matter said this month.

Saudi Arabia is favouring New York to list Saudi Aramco, while is also considering London and Toronto, the Wall Street Journal reported on Monday.

The oil giant also held discussions with the Singapore Exchange regarding a potential secondary listing, sources have said. – Reuters

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Saudi Arabia is all set for the world's biggest IPO: Here are the vital stats

Post by Admin on Sat Mar 04, 2017 7:13 am

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By ECONOMICTIMES.COM | Updated: 3 Mar, 2017, 18:25 hrs IST
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Saudi Arabia is aiming to sell 5 per cent of Saudi Aramco. The share sale would be worth $100 billion, four times the world's biggest IPO of Alibaba.
NEW DELHI: Saudi Arabia is going to break a Chinese record. Alibaba Group Holding Ltd, a Chinese Internet retailer, raised $25 billion in 2014, which made it the biggest IPO of the world. Saudi Aramco, the state-owned oil company of Saudi Arabia, is preparing for an IPO next year that would beat Alibaba's record.

Below are the key points of the world's biggest market event:

1. The size

Saudi Arabia is aiming to sell 5 per cent of Saudi Aramco. The share sale would be worth $100 billion, four times the world's biggest IPO of Alibaba. The share sale will value the company at $2 trillion. It will be far bigger than any of the biggest listed companies such as Apple, Berkshire Hathaway, Facebook, ExxonMobil and JPMorgan Chase. It will be bigger than the two biggest listed companies in the world—Apple and Alphabet, Google's holding company—put togther.

2. The listing
Saudi Aramco will list at Saudi Arabia’s domestic stock exchange, Tadawul. Since it will be too big for the local exchange, it is expected to be listed at one more exchange. This has kicked off a race among global exchanges. Hong Kong, Singapore, New York, Toronto, London and Tokyo are in the race. The company may not list at the New York Stock Exchange even if it wants due to regulations that would require it to declare its oil reserves which Saudi Arabia considers a state secret.

3. What will Saudi Arabia do with $100 billion?
For quite some time, Saudi Arabia is trying to diversify its economy to reduce dependence on oil. The money raised from the Saudi Aramco IPO will go into a public investment fund which aims at diversifying the economy. The money will drive a plan called Vision 2030, which calls for development of non-oil industries and broadbasing investment.

4. Will it impact oil prices?
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Yes, it might, as Saudi Arabia would like the oil prices to go up for higher valuation. Higher oil prices will raise the price of Aramco shares.

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