A giant IPO on track
A giant IPO on track
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.
Riyadh Future Investment Initiative summit on schedule for next week
- Future Investment Initiative to go ahead despite ‘disappointing’ withdrawals.
- It will be held in Riyadh from Oct. 23 to 25.
RIYADH: Officials and business leaders including US Treasury Secretary Steve Mnuchin, IMF Managing Director Christine Lagarde and JPMorgan Chase CEO Jamie Dimon are set to attend an investment summit in Saudi Arabia next week.
The Future Investment Initiative (FII) is going ahead despite the “disappointing” withdrawal of some speakers and partners.
It will be held in Riyadh from Oct. 23 to 25.
“Despite the disappointing withdrawal of some speakers and partners, we look forward to welcoming thousands of speakers, session managers and guests from around the world,” an FII spokesman said in a statement quoted by Asharq Al-Awsat.
An earlier statement gave an overview of the event, saying that “investing in transformation,” “technology as opportunity” and “advancing human potential” are among the FII’s broad themes.
Mohammed Khunaizi, a Shoura Council member, said that government and business leaders will map out a “collective vision for future” at the event.
“The FII conference has emerged as the largest investment event of its kind in the Middle East, which offers opportunities for billions of dollars in business deals besides being an educative forum,” he said.
JPMorgan chief Dimon has been quoted in media reports as saying: “I am looking forward to attending the Future Investment Initiative in Riyadh to discuss innovation in technology and what it means to all of us.”
Sami A. Al-Rajhi, a Saudi business executive, said: “The FII seeks to further explore how investment will drive growth opportunities regionally and globally.
“The event will help to bring many business opportunities to the country in particular and to the Middle East in general, which will support job creation, innovation and unlock economic opportunities.”