Saudi Aramco lines up banks, eyes local listing this year

3 min read
EMEA
Davide Barbuscia

(Reuters) - Saudi Aramco is expected to give lead roles to JP Morgan, Morgan Stanley and National Commercial Bank for its planned initial public offering (IPO), a source familiar with the transaction said.

It will also likely add Citigroup, Goldman Sachs, HSBC and Samba Financial Bank to the list of banks managing the transaction, a first phase of which could take place locally before the end of this year, said the same source and two other sources familiar with the matter.

Aramco is preparing to sell up to a 5% stake by 2020-2021, in what could be the world’s biggest IPO. It is still meeting banks pitching for roles on the deal, and is expected to appoint the advisers in the coming days, two of the sources said.

Morgan Stanley, JP Morgan and HSBC were chosen to play a leading role in the transaction before the process was halted last year.

The IPO is a centrepiece of Saudi Arabia’s economic transformation drive to attract foreign investment and diversify away from oil.

The kingdom is gearing up to fast-track a local listing of Aramco by bringing in the head of Saudi Arabia’s sovereign wealth fund, Yassir al-Rumayyan, who was recently named new chairman of the state oil giant and leads an executive committee overseeing plans to float shares in Aramco.

Should Aramco proceed with a local listing this year, international banks on the deal would be tasked with promoting the company to international investors looking to buy its shares on the Saudi main exchange, Tadawul.

It is not clear yet on which international exchange Aramco would list its shares, but sources have recently told Reuters that the board of Saudi Aramco has determined that listing in New York would carry too many legal risks to make it a realistic option.

Earlier this year Aramco raised US$12bn in its first international bond issue, obtaining over US$100bn in demand.

Many saw that deal as a relationship-building exercise with international investors ahead of its planned initial public offering, scheduled for last year and then postponed to 2020-2021.

The debt sale was expected to help fund Aramco’s US$69.1bn acquisition of a 70% stake in petrochemicals firm Saudi Basic Industries Corp (SABIC) from the Saudi sovereign wealth fund, a deal that many saw as a transfer of government funds aimed at boosting the Saudi Crown Prince’s economic agenda.

Aramco, Goldman Sachs, HSBC and JP Morgan declined to comment. Citi, Samba, Morgan Stanley and National Commercial Bank did not immediately respond to requests for comment.