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Banks Gear Up to Fight for Key Position in Saudi Aramco IPO
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The race to get a piece of what could very well be the largest IPO in history is heating up as investment banks around the world are beginning to fight for position in the upcoming Saudi Aramco initial public offering.
As part of a planned transformation in the domestic economy, Saudi Arabia’s state-owned oil company will soon offer less than 5% of its value to the public. If Deputy Crown Prince and head of Aramco’s Supreme Council Mohammed bin Salman is correct, the IPO will value the company at $2 trillion, and global investment banks are desperate to get in on the action.
“For banks, being on this [Aramco] deal is a game-changer for the league tables,” said one senior executive at a European bank, reports Lebanese news outlet The Daily Star.
This week, Saudi Arabia released its “National Transformation Plan,” a 110-page document that lists goals and policies the country plans to reach over the next four years. This is just a small part of the larger “Vision 2030” plan to wean the kingdom off its dependency on oil announced by Prince Mohammad a few months ago.
Saudi Arabia appears to be remaining consistent in its desire for new economic development, and part of its stipulations with banks looking to work on its IPO is that they must be interested in financing large infrastructure projects down the road. Future business also appears to be the motivation for many of the interested banks.
“The Aramco IPO of itself is not that interesting to us in terms of business. “The fees won’t be great, but it’s about what other business will result,” a senior source at a big investment bank anonymously told The Daily Star.
While we do know that JPMorgan (JPM - Free Report) , a longtime banker for the Saudis, has worked on the IPO, it is expected that dozens of international and local banks will meet with the kingdom over the next few weeks.
Saudi Aramco has yet to finalize its plans for the IPO, and several plans currently sit in front of the company’s Supreme Council. However, we do know that the kingdom intends on maintaining its ability to determining oil and gas outputs for the time being.
If Prince Mohammad’s valuation is correct, just over 1% of Aramco would cause the largest IPO of all time, meaning that the company should be shattering
records soon. Investors around the world should keep their eyes on this offering as it develops.
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Banks Gear Up to Fight for Key Position in Saudi Aramco IPO
The race to get a piece of what could very well be the largest IPO in history is heating up as investment banks around the world are beginning to fight for position in the upcoming Saudi Aramco initial public offering.
As part of a planned transformation in the domestic economy, Saudi Arabia’s state-owned oil company will soon offer less than 5% of its value to the public. If Deputy Crown Prince and head of Aramco’s Supreme Council Mohammed bin Salman is correct, the IPO will value the company at $2 trillion, and global investment banks are desperate to get in on the action.
(Also read: Everything You Need To Know About The Saudi Aramco IPO)
“For banks, being on this [Aramco] deal is a game-changer for the league tables,” said one senior executive at a European bank, reports Lebanese news outlet The Daily Star.
This week, Saudi Arabia released its “National Transformation Plan,” a 110-page document that lists goals and policies the country plans to reach over the next four years. This is just a small part of the larger “Vision 2030” plan to wean the kingdom off its dependency on oil announced by Prince Mohammad a few months ago.
Saudi Arabia appears to be remaining consistent in its desire for new economic development, and part of its stipulations with banks looking to work on its IPO is that they must be interested in financing large infrastructure projects down the road. Future business also appears to be the motivation for many of the interested banks.
“The Aramco IPO of itself is not that interesting to us in terms of business. “The fees won’t be great, but it’s about what other business will result,” a senior source at a big investment bank anonymously told The Daily Star.
While we do know that JPMorgan (JPM - Free Report) , a longtime banker for the Saudis, has worked on the IPO, it is expected that dozens of international and local banks will meet with the kingdom over the next few weeks.
Saudi Aramco has yet to finalize its plans for the IPO, and several plans currently sit in front of the company’s Supreme Council. However, we do know that the kingdom intends on maintaining its ability to determining oil and gas outputs for the time being.
If Prince Mohammad’s valuation is correct, just over 1% of Aramco would cause the largest IPO of all time, meaning that the company should be shattering
records soon. Investors around the world should keep their eyes on this offering as it develops.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>