Saudi Aramco Picks J.P. Morgan, HSBC, Morgan Stanley as Lead IPO Underwriters
February 21 2017 - 7:05PM
Dow Jones News
By Summer Said and Ben Dummett
Saudi Arabia's state-owned energy company has told J.P. Morgan,
HSBC and Morgan Stanley they will be the lead underwriters for its
planned initial public offering, set to be the largest ever,
according to people familiar with the matter.
The three banks will lead the giant offering of about as much as
5% of Saudi Arabian Oil Co, known as Saudi Aramco, the people
said.
The three banks declined to comment. A spokesperson for Aramco
said the firm doesn't comment on rumor or speculation.
Analysts say the stake being offered could fetch as much at $100
billion to $150 billion and Saudi Arabian Deputy Crown Prince
Mohammed bin Salman has estimated that the entire company is valued
over $2 trillion.
Much of the money raised by the IPO would go to the country's
sovereign-wealth fund, which would use it to diversify the
kingdom's economy through investments. The Financial Times recently
reported the three were favorites to win lead roles on the
deal.
The IPO's massive size and its importance as part of Saudi
Arabia's National Transformation Plan to modernize the kingdom's
economy and wean it off oil has pushed banks to try to win a
coveted underwriter role. That competition is expected to force
underwriters to accept sharply lower fees, though they still stand
to gain from a bonanza of fees because of the offering's
magnitude.
Participation in a successful IPO also has longer-term
implications for the banks by positioning them to win additional,
future business as the Middle Eastern country continues to seek
advice on reshaping its economy.
Prince Mohammed has said the listing would occur in 2018. But
complications restructuring Aramco and disentangling its finances
from the government could delay the IPO until 2019, The Wall Street
Journal reported last week.
Aramco says it managed over 260 billion barrels of oil reserves
for the Saudi kingdom and pumps almost 10 million barrels a day --
far more than private-sector competitors such as Exxon Mobil
Corp.
With the three main underwriters lined up, the next challenge
will be to fill out the rest of the underwriting syndicate. Aramco
and its advisers also need to select an exchange to list its shares
following the new issue.
Aramco is leaning toward listing its giant, state-run oil
company on the New York, London or Toronto exchanges and has soured
on the prospect of floating shares of the firm on an Asian stock
exchange, people familiar with the matter said, The Wall Street
Journal reported this week.
Maureen Farrell contributed to this article.
Write to Summer Said at summer.said@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
February 21, 2017 18:50 ET (23:50 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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