Riyadh has picked US-based lender JPMorgan and Michael Klein, who runs a boutique advisory, to help it with the planned share sale of Saudi Aramco. It is a step forward for a deal which could see the worlds biggest oil producer become a listed firm with value running into trillions of dollars.
This is not the only equity capital market transaction happening in Saudi Arabia, Opecs top oil exporter and the biggest Middle Eastern economy. which is weighing sweeping reforms to cut its dependence on sale of hydrocarbons for revenues. The kingdoms stock exchange Tadawul has invited investments banks to pitch for an advisory mandate for its initial public offering (IPO). Saudi Grains organisation, a company at the forefront of Kingdoms food security programme, has invited banks to help it with restructuring of its business and an eventual share sale.
These few deals are just the tip of the iceberg. Riyadh has identified about 146 companies, in which its plans to sell stake to public or strategic private investors. Imagine the deal flow once the Kingdom announces its economic vision on April 25 and put the National transformation Plan (NTP) in action within 30-45 days thereafter.
Private companies are not far behind in the race to secure funds from equity capital markets. Acwa Power has revived plans to raise $1bn through an IPO and Naqel, a state-controlled logistics and transportation firm, has engaged GIB Capital to help it sell about 30 per cent of its share to public next year.
Saudi Arabia is a deal galore for investments banks which are going through a significantly dry patch elsewhere in six-member economic bloc of GCC. The sheer volume of the deal news-flow coming out of the kingdom is immense. Clearly, Riyadh and Jeddah, the commercial hub of the kingdom, are the places to be for investment bankers in foreseeable future.