Saudi Aramco has picked banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. for top roles on its planned initial public offering after intense lobbying by some of the world's top deal makers, people with knowledge of the matter said.
Aramco told banks of their selection Tuesday, the people said, asking not to be identified because the information is private. It plans to add more joint global coordinators to the deal, according to the people.
The energy giant is considering first selling around a 1% stake through a listing on the Saudi stock exchange, with the possibility of selling another 1% on the Saudi exchange at a later date, one person said. Aramco, officially known as Saudi Arabian Oil Co., declined to comment. Representatives for Goldman Sachs and JPMorgan also declined to comment.
Chief Executive Officer Amin Nasser said earlier Tuesday that Aramco is going to sell shares "very soon." The primary exchange for the listing will be Saudi, Nasser said at an industry conference in Abu Dhabi.
Aramco is targeting an offering in the domestic market as soon as late this year or early 2020 ahead of an eventual international listing, Bloomberg News has reported. While it has yet to make a decision on the overseas venue, top officials from exchanges in London, New York and and Hong Kong have been actively pitching the oil producer.
Bankers spent the beginning of the month making presentations in Aramco's headquarters in Dhahran, with some additional meetings in Dubai and London, Bloomberg News has reported. The company invited more than 20 advisory firms from the U.S., Europe and Asia to compete, including some of the world's biggest underwriters as well as a number of smaller banks.
It was the final push in what was, for some, years of relationship building with Aramco in the kingdom's Eastern Province. The oil producer was originally working with Evercore Inc. and Moelis & Co., as well as HSBC Holdings PLC, JPMorgan and Morgan Stanley, during its first attempt at an initial public offering.
The on-again, off-again plans for an Aramco listing had been put on hold as the firm focused on a $69 billion deal for a majority stake in petrochemical maker Saudi Basic Industries Corp. When the preparations were revived this year, many of the banks that won roles initially had to start over, leading some to wonder whether it was worth the effort.
Saudi Crown Prince Mohammed bin Salman announced the initial public offering project in 2016 as the cornerstone of the kingdom's Vision 2030 plan to modernize its economy, with a target of listing in the second half of 2018.
The crown prince has valued Aramco at $2 trillion, but analysts estimate it could be worth closer to $1.5 trillion. Even at that lower end, a partial listing of Aramco would potentially be the world's biggest initial public offering ever.
An Aramco listing is a key part of the crown prince's efforts to diversify the kingdom's oil-driven economy. Crown Prince Mohammed plans to transfer funds from Aramco to the sovereign wealth fund and use those earnings, from investments abroad, to support large-scale local development projects that can create millions of jobs for young Saudis.
Diversification efforts are seen as the kingdom's top priority as oil trades around $60 a barrel, below the $80-$85 range needed to cover government spending.
The International Monetary Fund said Monday that unemployment remains high at 12.5%, with the economy projected to grow 1.9% this year. The international lender also projected the kingdom's budget deficit to widen, even as the government pushes ahead with sweeping economic changes.
The Ministry of Finance issued a statement saying that while it agrees with the International Monetary Fund's projections of the economic outlook over the medium term, it differs with the expected budget deficits estimated by the report.
In recent days, momentum has picked up toward an Aramco listing. Last week, Aramco named the finance-minded Yasir al-Rumayyan as its new board chairman. Al-Rumayyan heads the country's sovereign wealth fund and is a close adviser of the crown prince.
He replaced Khalid al-Falih, who was the kingdom's energy minister until early Sunday.
Analysts have said removing al-Falih as board chairman would help separate the government and the operations of Aramco, giving Aramco the appearance of a company that makes its own decisions based on business conditions rather than purely government interests.
Still, production guidelines for the company will come from the energy ministry, Nasser said.
Information for this article was contributed by Dinesh Nair, Matthew Martin, Myriam Balezou, Archana Narayanan and Sarah Algethami of Bloomberg News; and by Aya Batrawy and Fay Abuelgasim of The Associated Press.
Business on 09/11/2019