Saudi Pushing for Aramco IPO as JP Morgan Closes in on Advisory Role

Last updated on September 15th, 2019

Saudi Arabia, a nation with a vision that separates oil from water, is once again looking ahead to lessen its dependency on black gold. As stated, the kingdom is planning a gradual Aramco IPO on its domestic market, besides looking forward to finalizing the roles banks will play in the initial public offering (IPO) of the state-owned oil giant.

Saudi Arabia formally asked banks to submit proposals last month and as it has come up now, JPMorgan Chase & Co is close to taking up the advisory role for Aramco’s IPO.

Interestingly, the race for a role in the Saudi oil company has been dominated by American banks followed in by others. The list includes, JPMorgan, Morgan Stanley, National Commercial Bank, Citi, Goldman Sachs, HSBC and Samba Financial Bank.

The kingdom, based on the plans, will initially list 1 per cent of Aramco on the Riyadh stock exchange before the end of this year and another 1 per cent in 2020. The Aramco IPO was initially planned for last year, however, Saudi Arabia slated its plans to privatize.

Following which, the Crown Prince of Saudi Arabia Mohammed bin Salman, took a $69 billion acquisition in SABIC – a state owned petrochemical company. The kingdom also issued bonds to raise $12 billion, and gained more than $100 billion in demand. Now, the Reuters reported that the Saudi officials are keen to go ahead and could list as early as November.

Based on the previous claims, Aramco’s 5 per cent – the entire percentage to be listed – has been largely touted as to be valued at $2 trillion. The amount, thus, means even a per cent share of the company would be valued at $20 billion, and if that’s true then it would be the world’s biggest IPO.

The IPO hype also comes at a time when the kingdom reshuffled roles and removed Khalid al-Falih from the post of energy minister. He is now replaced by King Salman’s son, Prince Abdulaziz bin Salman, who on Monday – giving his first statement on the matter – said that Saudi Arabia is targeting for Aramco IPO “as soon as possible”.

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