Top executive at the lender says the bank has received formal mandate for worlds biggest share sale
The UKs HSBC has received a formal mandate from Saudi Aramco to advise on its initial public offering (IPO), which is expected to be the worlds largest-ever share offering.
The advisory mandate was confirmed by the banks chief executive Stuart Gulliver at shareholders meeting in Hong Kong, according to a report by news agency Reuters. HSBC, the biggest European lender, will work together on the deal with the Wall Street players including JPMorgan Chase and Morgan Stanley.
Officials in January had asked banks to pitch for advisory roles on the IPO. In total six bank were invited to send their proposals, however, Aramco, the state-controlled oil and gas giant, has yet to make a formal announcement on the advisory roles. Aramco CEO Amin Nasser in October had said that the firm will very soon announce a list of investment banks and consultants for the IPO.
The company in February had appointed the investment bank Moelis & Co as an internal independent advisor, as part of a team tasked with preparing for the mega share sale. Michael Klein, an investment banker who runs his own advisory firm, has also been picked to work on the deal.
Riyadh, which is struggling to plug a budget gap on the back of weaker oil prices, which makes up bulk of its revenue, is trying diversify its economy away from hydrocarbons. The plans laid out under its National Transformation Plan (NTP) and Vision 2030 includes reducing subsidies, introducing taxes, spending cuts and increasing and introducing new fees on government services to generate alternative revenue lines.
The kingdom intends to the part-privatise some of the state-controlled assets as part of its broader diversification strategy, but the share offering of Aramco been the main focus of attention at home and abroad.
The firm, which has been the main revenue-earner for Saudi Arabia over the past eight decades, is targeting the second half of the 2018 for the public float. Riyadh aims to list less than 5 per cent of Aramco, which is estimated to be valued at more than $2 trillion. Most of the estimated $100bn proceeds of the public float will be transferred to the kingdoms sovereign wealth fund Public Investment Fund (PIF).
The primary listing will take place on Saudi Stock Exchange (Tadawul) and one or two as yet unnamed international bourses. It may favour a western exchange including New York, London or Toronto, and is unlikely to pursue listing plans for an Asian exchange despite holding talks with bourses there.
Saudi Aramco IPO timeline
21 February, 2017: Riyadh is likely to list Aramco on a western exchange
9 February, 2017: Aramco appoints IPO advisor
24 January, 2017: Saudi Aramco seeks IPO advisers
17 November, 2016: Saudi Arabia prepares to reveal size of its oil reserves
9 October, 2016: Aramco public offering gathers steam
Indications are Riyadh will fulfil its promise of listing Aramco in its entirety
6 October, 2016: Saudi Aramco prepares to reveal its accounts
The top global oil exporter is getting ready to publish its accounts next year ahead of planned 2018 IPO
27 September, 2016: Aramco is key to Saudi privatisation drive
CEO says listing of crown jewel shows governments commitment to economic diversification
26 September, 2016: Saudi Aramco to spend $334bn over the next decade
Oil well count will increase to 1,000 by 2020,
18 September, 2016: Japan is not eying Aramco IPO investment
The country is interested in jointly investing with the Saudi government in industrial ventures in the kingdom
5 September, 2016: Saudi Aramco may consider listing on Tokyo bourse
The kingdom is preparing to list bout 5 per cent of oil and gas giant on local and international exchanges
28 August, 2016: Aramco IPO is on track for 2018 listing
Saudi Arabia says the process will require time to optimise value for potential shareholders
11 August, 2016: Aramco appoints investment fund head to its board
Move hints at closer cooperation between PIF and Aramco which are central to kingdoms economic plans. Yasir al-Rumayyan is the managing director PIF and an advisor to the royal court
30 June, 2016: Saudi Arabia seeks Japanese investment in Aramco IPO
Officials from the two countries are discussing Japans investment in Aramco share float, possibly the biggest global IPO
26 April, 2016: Vision 2030: The reforms announced so far
Sweeping overhaul of Saudi economy announced by deputy crown prince including Aramco IPO
25 April, 2016: Riyadh announces sweeping reforms with Vision 2030 plan
Full details of economic roadmap due in 30-45 days
25 April, 2016: Saudi prince reveals economic vision
Deputy Crown Prince Mohammed bin Salman unveils main points of kingdoms strategy to diversify its economy in next 15 years
25 April, 2016: Saudi Arabia confirms Aramco listing
The kingdom plans to list less than 5 per cent of the company as part of economic reforms
20 April, 2016: Deals galore for investment banks in Saudi Arabia
Saudi Aramco, Tadawul and Saudi Grains are just a few among state entities looking to list shares
20 April, 2016: Saudi Arabia picks Aramco IPO advisors
Riyadh plans to list less than 5 per cent of Aramcos parent company
3 April, 2016: Saudi Arabia plans $2 trillion sovereign fund
Kingdom to create the worlds largest sovereign wealth fund including the oil giant Saudi Aramco. The Public Investment Fund (PIF), will eventually control more than $2 trillion including ownership of Aramco. Aramco offering could happen in 2018.
20 January, 2016: Spare oil capacity could hinder Aramcos upstream business listing
The company is more likely to list downstream assets if the government goes ahead with share sale plans
14 January, 2016: Riyadh to maintain controlling stake if Aramco is listed
Oil majors CEO says a range of options is being considered
11 January, 2016: Aramco listing could include upstream assets
Chairman lists companies slated for stand-alone listings
10 January, 2016: Aramcos share sale plan is part of a sweeping reform agenda
State oil majors potential IPO has implications for every energy consumer in Saudi Arabia and practically every energy-importing nation on earth
8 January, 2016: Aramco IPO to accelerate projects market overhaul
Listing is latest new initiative aimed at modernising project delivery in Saudi Arabia
8 January, 2016: Aramco listing could create worlds first $1 trillion company
Timing of IPO suggests government objective is creating wealth not raising funds
7 January, 2016: Riyadh considers listing Saudi Aramco
State oil company could be worth more than $10 trillion
In an interview with The Economist, Deputy Crown Prince Mohammed bin Salman al-Saud said that a decision will be taken in the next few months and that a listing would make the company more transparent.