A giant IPO on track

Updated 19 February 2017

A giant IPO on track

The largest initial public offering (IPO) in history seems to be on track. On Friday, the Financial Times newspaper reported that Saudi Arabia is close to appointing the banks that will be lead underwriters on the IPO of Saudi Aramco, the world’s largest oil producer.
Two major banks have been identified, JPMorgan, Saudi Aramco’s longstanding commercial banker and Morgan Stanley that is also expected to be a global coordinator and bookrunner on the listing, according to the news report.
A third bank, HSBC, is tipped for an underwriting role on the Saudi Aramco planned sale of 5 percent stake in the state-controlled company in 2018. The paper said that HSBC’s name was brought up because of its ability to tap Asian investors due to the bank’s origins in Hong Kong and its longstanding presence in the Middle East.
This development is no surprise at all. Saudi Aramco CEO Amin Nasser has pointed out in an interview with Bloomberg’s Editor-in-Chief John Micklethwait during the World Economic Forum (WEF) in Davos last month that Aramco would soon appoint banks that would advise it on theIPO.
So in February, it was reported in the media that Saudi Aramco has chosen Moelis & Co., a boutique investment bank in New York, to be its lead independent adviser on the flotation. Moelis is said to advise the company on how to go about the IPO, including the selection of underwriters and deciding issues such as where the company should list its shares.
As Nasser said, the banks selection is the step that will come before choosing the market where Aramco will list its shares. The list of potential bourses is too long and diverse from Toronto in Canada to Singapore. The company is also working on preparing its quarterly financial statements for the first time. The statements will be ready this year but will not be available to the public until next year when the IPO takes place.
The whole purpose of this exercise is to prepare the company for the flotation and to provide the investors with historical figures to compare future results with.
So, is everything almost in place for the IPO? Not really. There are many pending legal and structural issues to be dealt with and a year’s time could be too short or it could be just enough depending on the speed of the team working on the IPO at Aramco.
So at the “IPO hive,” people are working around the clock and there is no minute to spare. What Aramco needs to decide on hastily is how it will present the company to the global investors? What assets will be included in the sale? At what tax rate it should be sold to public? And at what value the company should be sold?
Aramco’s taxation is still almost the same since the days when it was owned by four American companies. The government obtains 20 percent in royalty fees from the earning and it taxes 85 percent of Aramco’s revenues. At this rate, the cash flow generated from the company will not be enough to lure all the investors. CEO Amin Nasser is aware of this situation and he said in Davos that they were in talks with the government to change the tax regime. So, there are still many things to be done in a limited time. To list Aramco in 2018 is perhaps the biggest challenge for the company.


Electric luxury vehicles, SUVs ‘more likely to cause accidents’

Updated 23 August 2019

Electric luxury vehicles, SUVs ‘more likely to cause accidents’

  • As EV sales rise, French insurer AXA warns that drivers are struggling to adapt to cars’ rapid acceleration

LONDON: Electric luxury cars and sport utility vehicles (SUVs) may be 40 percent more likely to cause accidents than their standard engine counterparts, possibly because drivers are still getting used to their quick acceleration, French insurer AXA said.

The numbers, based on initial trends from claims data and not statistically significant, also suggest small and micro electric cars are slightly less likely to cause accidents than their combustion engine counterparts, AXA said at a crash test demonstration on Thursday.

AXA regularly carries out crash tests for vehicles. This year’s tests, which took place at a disused airport, focused on electric cars.

Overall accident rates for electric vehicles are about the same as for regular cars, according to liability insurance claims data for “7,000 year risks” — on 1,000 autos on the road for seven years — said Bettina Zahnd, head of accident research and prevention at AXA Switzerland.

“We saw that in the micro and small-car classes slightly fewer accidents are caused by electric autos. If you look at the luxury and SUV classes, however, we see 40 percent more accidents with electric vehicles,” Zahnd said.

“We, of course, have thought about what causes this and acceleration is certainly a topic.”

Electric cars accelerate not only quickly, but also equally strongly no matter how high the revolutions per minute, which means drivers can find themselves going faster than they intended.

FASTFACT

Accident rates among luxury and SUV electric vehicles are 40 percent higher than for their combustion engine counterparts.

Half of electric car drivers in a survey this year by AXA had to adjust their driving to reflect the new acceleration and braking characteristics.

“Maximum acceleration is available immediately, while it takes a moment for internal combustion engines with even strong horsepower to reach maximum acceleration. That places new demands on drivers,” Zahnd said.

Sales of electric cars are on the rise as charging infrastructure improves and prices come down.

Electric vehicles accounted for less than 1 percent of cars on the road in Switzerland and Germany last year, but made up 1.8 percent of Swiss new car sales, or 6.6 percent including hybrids, AXA said.

Accidents with electric cars are just about as dangerous for people inside as with standard vehicles, AXA said. The cars are subject to the same tests and have the same passive safety features such as airbags and seatbelts.

But another AXA survey showed most people do not know how to react if they come across an electric vehicle crash scene.

While most factors are the same — securing the scene, alerting rescue teams and providing first aid — it said helpers should also try to ensure the electric motor is turned off. This is particularly important because unlike an internal combustion engine the motor makes no noise. In serious crashes, electric autos’ high-voltage power plants automatically shut down, AXA noted, but damaged batteries can catch fire up to 48 hours after a crash, making it more difficult to deal with the aftermath of
an accident.

For one head-on crash test on Thursday, AXA teams removed an electric car’s batteries to reduce the risk of them catching fire, which could create intense heat and toxic fumes.

Zahnd said that studies in Europe had not replicated US findings that silent electric vehicles are as much as two-thirds more likely to cause accidents with pedestrians or cyclists.

She said the jury was still out on how crash data would affect the cost of insuring electric versus standard vehicles, noting this always reflected factors around both driver and car.

“If I look around Switzerland, there are lots of insurers that even give discounts for electric autos because one would like to promote electric cars,” she said.