Saudi Aramco Hires Nine Investment Banks To Lead Its IPO

Saudi Aramco IPO
A production facility is seen at Saudi Aramco's Shaybah oilfield in the Empty Quarter (Photo: Reuters / Ahmed Jadallah)

Saudi Aramco has officially named the nine banks that it has hired to aid it in its planned initial public offering (IPO). The oil giant's IPO is expected to become the world's largest IPO with an estimated value of around $100 billion, according to Saudi Crown Prince Mohammad bin Salman.

Major investment banks from all over the globe have all fought to earn a seat in the highly-anticipated public offering, with a number offering different incentives in their bid to be considered for the position.

The kingdom first revealed that it has retained the services of the banks it initially hired for its initial share sale prior to putting its plans on hold last year. These banks include JPMorgan Chase & Co, Morgan Stanley, and the country's own National Commercial Bank.

JPMorgan will reportedly be taking the lead role on the IPO. The bank has reportedly tapped its best senior bankers from London and New York, most of which already have a standing relationship with Saudi Arabia and company officials.

In addition to the three banks, Saudi Aramco has chosen to hire Bank of America Merrill Lynch, Credit Suisse Group AG, HSBC Holdings PLC, Goldman Sachs Group Inc, Citigroup Inc, and the country's own Samba Financial Group.

Saudi Aramco, the world's largest oil company, plans to list just 1 percent of its stock on the Riyadh Stock Exchange sometime before the year ends. This will then be followed by the listing of an additional 1 percent by 2020. Saudi Arabia plans to eventually list up to 5 percent of the state-owned firm.

Saudi Aramco CEO Amin Nasser mentioned this week that they will be prioritizing their domestic listing. However, the company is laying out plans for an international share sale. The exact location and the date of the planned international share sale have apparently not yet been determined as the decision will solely lie with on the country's government.

Based on the current market valuation that Saudi Aramco had estimated, which it currently states should be around $2 trillion, the first 1 percent share sales should be worth around $20 billion. However, some bankers and analysts have stated that Saudi Aramco will more realistically be able to get a valuation of $1.5 trillion.

After putting on hold its IPO plans, efforts to restart it have gained momentum following a significant overhaul in the company's leadership structure and the country's oil ministry. Last week, the kingdom appointed PIF sovereign wealth fund head Yasser al-Rumayyan as Saudi Aramco's new chairman.

The kingdom also replaced the country's oil minister Khalid al-Falih with the country's own Prince Abdulaziz bin Salman bin Abdulaziz al-Saud. The new oil minister is Crown Prince Mohammed bin Salman's half brother with extensive experience in OPEC negotiations.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Sign Up for Newsletters and Alerts