CEO says Saudi Aramco on track for IPO in second half of 2018

18 January 2018
Riyadh has yet to decide on venue for oil company's foreign listing

Saudi Aramco’s chief executive Amin Nasser has that the initial public offering (IPO) of the state energy giant is still planned for the second half of 2018, although Riyadh has not yet made a decision on the venue for the listing.

“The company is ready for listing in 2018 when the decision is taken on the listing venue,” Nasser has been quoted by media reports as saying at the company’s headquarters in Dhahran.

Nasser said that the government is considering a number of foreign exchanges for the overseas listing of Aramco, to complement the home listing of the company on the Saudi Stock Exhange (Tadawul). Several reports in recent days have said Aramco may have shortlisted the Hong Kong, London and New York bourses, meaning Toronto, Singapore and Tokyo may be out of the race

Nasser has also revealed that the plan remains to list the whole company rather than creating a subsidiary to IPO.

Meanwhile, the banks that will reportedly advise and execute Saudi Aramco’s stock market listing planned for later this year are expected to share a tiny portion of the $100bn Riyadh hopes to raise through its IPO.

Banks involved in the flotation are expected to share a fifth of the money raised, Reuters has reported quoting its sources, meaning that the group of banks and bookrunners would have to split about $200m among themselves.

MEED had earlier reported that Saudi Aramco may 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 through the IPO. Aramco has also appointed US-based JPMorgan Chase & Co, UK-based HSBC and Morgan Stanley as global coordinators.

MEED had also reported that 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.

Banks are competing fiercely for mandates in the IPO because it is viewed as a gateway to other deals expected to emerge from Saudi Arabia’s plan to revamp its economy via privatisation and public-private partnerships.

Saudi Aramco is known for having paid relatively low banking fees in the past, Reuters’ banking industry sources said. Reuters quoted Freeman Consulting as estimating that the fee pot compares to an average of 2-2.5 per cent for IPOs by companies in the region.

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