As part of its strategy to exit non-core operations across the globe, JPMorgan’s (JPM - Free Report) subsidiary, JPMorgan International Finance is selling its 7.5% stake back to Saudi Investment Bank for 759.3 million riyals ($203 million). The transaction, expected to close by September-end, is still subject to regulatory approvals.
Notably, the Saudi bank will pay 13.5 riyals a share (a discount of nearly 24%) and plans to hold the shares as treasury stock, which will be re-issued as preferred shares later on.
Apart from JPMorgan, several other global banks including Royal Bank of Scotland (RBS - Free Report) and Credit Agricole SA (CRARY - Free Report) are selling their stakes in local banks.
Nonetheless, JPMorgan is the only U.S. bank with both investment and commercial banking licenses operating in Saudi Arabia.
Despite selling its stake, the company is looking forward to business opportunities stemming from reforms announced by the kingdom’s crown prince. Also, it is among the banks that are advising Saudi Aramco on an international public offering, which is expected to be the largest in the world.
Per the data compiled by Bloomberg, JPMorgan is ranked second to HSBC Holdings (HSBC - Free Report) for M&A advisory in the country over the past seven years. JPMorgan in a statement commented that it is the process of “steadily increasing its local equities execution and custody capabilities.”
Further, Bader Alamoudi, senior country officer for JPMorgan said, “We are excited and optimistic about the kingdom's economic prospects, the opportunities offered by Vision 2030 and our firm's ability to support it.”
Shares of JPMorgan have rallied 21.2% in the past year, outperforming the industry’s rise of 13.3%.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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