Leading investment banks out of race for Aramco IPO role

17 January 2018
Saudi Aramco ignores inviting the three Western banks for recent meetings in the kingdom to discuss its stock flotation

Saudi Aramco has not invited Swiss bank UBS, the UK's Barclays and the US' Bank of America Merrill Lynch to pitch for financial advisory roles in its planned stock market listing.

According to five sources of Reuters, Aramco’s decision could be due to these institutions not lending money to the oil company in recent years.

The three banks, among the world’s biggest, have not been asked to attend meetings in Saudi Arabia in the coming weeks, where its rivals will pitch for global coordinator functions for Aramco’s initial public offering (IPO) planned for later this year, Reuters has reported quoting its sources.

MEED had earlier reported that Aramco is likely to hire American investment banking firm Goldman Sachs and New York-based global banking major Citigroup as advisers to help it execute the planned sale of 5 per cent of its shares.

US-based JPMorgan Chase & Co, UK-based HSBC and Morgan Stanley also stand a chance to be hired by Aramco as global coordinators.

UBS, Barclays and BoA Merrill Lynch have been frozen out by Aramco, the sources added, despite having operations in the Middle East and wanting to take part in the IPO, which could be the biggest in history.

The sources said the exclusion of the banks reflected a corporate culture in the region of evaluating advisory mandates on the basis of how much of its own money a lender is willing to commit.

Aramco will need to borrow significant sums from Western banks in years to come to keep up with its ambitious investment pledges.

The three excluded banks could still be awarded junior advisory or bookrunner roles in the stock market listing of the Saudi energy giant.

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