Banks gear up for Aramco’s digital IPO

FILE PHOTO: An employee in a branded helmet is pictured at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019.(Reuters)
Updated 13 November 2019

Banks gear up for Aramco’s digital IPO

  • On Nov. 17, Aramco will publish a minimum and maximum range for the share price

DUBAI: Aramco yesterday issued guidelines on the private tranche of the IPO, which said: “Individual investors who have recently participated in IPOs in the Kingdom can also subscribe through the Internet, mobile applications, telephone banking or ATMs at any of the Receiving Entities branches that offer any or all such services to its customers,” provided they have accounts there and their personal details have not changed recently.

The 13 banks officially designated are: NBC, SAAB, Samba, Al Rajhi, Alawwal, Alinma, Arab National, Albilad, Aljazira, Banque Saudi Fransi, Gulf International, Riyadh and Saudi Investment Bank.

Some advisers to the IPO believe that Saudi investors may be confused by the concept of “bookbuilding,” the process by which the shares will eventually be priced and allocated, which has been only rarely used in the past. In the guidelines, the process is set out.

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On Nov. 17, Aramco will publish a minimum and maximum range for the share price. Investors will decide how many shares they want to buy at the top end of that range, which will also determine how much they want to spend in the IPO.

For private investors, the bookbuilding period closes on Nov. 28, and the final price of the shares will be announced on Dec. 5, after the bigger institutional bookbinding is complete. Private investors must pay for the shares.

If there are applications for more than the 0.5 percent on offer — amounting to 1 billion shares — allocations to private investors will be scaled back proportionate to demand; if there are fewer applications than the 0.5 percent when all maximum applications are satisfied, private investors can have the over-payment refunded either in cash via the receiving banks or in the form of extra shares in Aramco.

There is an incentive mechanism in the IPO whereby Saudi investors will receive a bonus one-for-ten allocation of shares, up to a maximum of 100 shares, if they do not sell shares in the market for a period of six months after dealings begin in December, at a date still to be determined.


Innovation jobs flocking to a handful of US cities

Updated 09 December 2019

Innovation jobs flocking to a handful of US cities

  • Economists fear job clustering could have a “destructive” influence on society

WASHINGTON: A new analysis of where “innovation” jobs are being created in the US paints a stark portrait of a divided economy where the industries seen as key to future growth cluster in a narrowing set of places.

Divergence in job growth, incomes and future prospects between strong-performing cities and the rest of the country is an emerging focus of political debate and economic research. It is seen as a source of social stress, particularly since President Donald Trump tapped the resentment of left-behind areas in his 2016 presidential campaign.

Research from the Brookings Institution released on Monday shows the problem cuts deeper than many thought. Even cities that have performed well in terms of overall employment growth, such as Dallas, are trailing in attracting workers in 13 industries with the most productive private sector jobs.

Between 2005 and 2017, industries such as chemical manufacturing, satellite telecommunications and scientific research flocked to about 20 cities, led by well-established standouts San Francisco, Seattle, San Jose, Boston and San Diego, the study found. Combined, these mostly coastal cities captured an additional 6 percent of “innovation” jobs — some 250,000 positions.

Companies in those industries tend to benefit from being close to each other, with the better-educated employees they target also attracted to urban amenities.

Brookings Institution economist Mark Muro said he fears the trend risks becoming “self-reinforcing and destructive” as the workforce separates into a group of highly productive and high-earning metro areas and everywhere else.

Even though expensive housing, high wages, and congestion have prompted some tech companies to open offices outside of Silicon Valley, those moves have not been at scale. Most US metro areas are either losing innovation industry jobs outright or gaining no share, Muro wrote.

Over this decade, “a clear hierarchy of economic performance based on innovation capacity had become deeply entrenched,” Muro and co-author Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote in the report. Across the 13 industries they studied, workers in the upper echelon of cities were about 50 percent more productive than in others.

For much of the post-World War Two period labor was more mobile, and the types of industries driving the economy did not cluster so intensely, a trend that started reversing around 1980.

Concerns that the US is separating effectively into two economies has sparked support for localized efforts to spread the benefits of economic growth.

The Federal Reserve has flagged it as a possible risk to overall growth, and some of the presidential candidates running for office in 2020 have rolled out proposals to address it. One aim of Trump’s decision to impose tariffs on imports from China and elsewhere is to revive ailing areas of the country.