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Goldman, Citi eyed for Aramco IPO: sources

A view shows Saudi Aramco's Abqaiq oil facility in eastern Saudi Arabia in this undated handout photo. Saudi Aramco/Handout

Saudi Arabian Oil Co. is set to appoint banks including Goldman Sachs Group Inc. and Citigroup Inc. to help manage its initial public offering, people familiar with the matter said, as the state-owned crude producer pushes ahead with what could be the world’s largest share sale. JPMorgan Chase & Co., HSBC Holdings PLC and Morgan Stanley, which have been advisers on the share sale, are also expected to be named as global coordinators, the people said, asking not to be identified because the information is private. Some banks pitching for roles on the IPO are tentatively valuing the company at between $1 trillion and about $1.5 trillion, they said.

The mandates could be finalized as early as this week, the people said. The list of banks isn’t final and more could be added, they said.

Aramco, as the company is known, last month asked banks to pitch for roles as coordinators and book runners for the IPO, people familiar with the matter said at the time. Saudi Arabia is seeking to sell as much as 5 percent of Aramco as part of a plan by Crown Prince Mohammad bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons.

The sale could be the largest ever, based on the government’s $2 trillion valuation of the company. Aramco, Goldman Sachs, Citigroup, HSBC, Morgan Stanley and JPMorgan declined to comment.

“This shows that the commitment to push ahead with the Aramco IPO is unrelenting as it’s a core pillar of the government’s economic diversification strategy,” said John Sfakianakis, director of economic research at the Gulf Research Center.

Saudi Arabia is stepping up plans to diversify its economy away from oil under an economic transformation plan known as Vision 2030. The kingdom aims to transfer ownership of Aramco to the kingdom’s Public Investment Fund.

The IPO is moving ahead and all options are open on where to list shares of the giant oil producer, Finance Minister Mohammad al-Jadaan said in December, dispelling reports that the process was delayed. The state-owned company has previously said the share sale is scheduled for later this year.

The November arrests of Saudi princes and officials accused of corruption won’t harm foreign investment or the kingdom’s plan for the offering, Energy Minister Khalid al-Falih said that month.

The share sale has drawn interest from international stock exchanges in London, New York, Hong Kong, Singapore, Tokyo and Toronto, which are all competing to host the Aramco listing.

U.S. President Donald Trump personally lobbied Saudi King Salman to list Aramco on the New York Stock Exchange during a phone call between the world leaders in November. Later that month, U.K. Prime Minister Theresa May said London was “extremely well-placed” to win the listing.

The U.K. has already invested considerable political capital to try to secure the business for the London Stock Exchange. The government in November agreed to a $2 billion loan guarantee, an unusually large export credit guarantee that’s designed to finance the purchase of British goods, but that also opened May up to the suggestion she was trying to influence the listing decision.

Britain’s main financial regulator, the Financial Conduct Authority, has also drawn criticism for proposed changes to listing rules that would make it easier for Aramco to trade in London.

 
A version of this article appeared in the print edition of The Daily Star on January 09, 2018, on page 4.

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