‘Door is open’ to foreign investors in Aramco IPO – NCB Capital

‘Door is open’ to foreign investors in Aramco IPO – NCB Capital
Saudi Arabia put a value of up to $1.71 trillion on energy giant Aramco. (File/AFP)
Updated 25 November 2019

‘Door is open’ to foreign investors in Aramco IPO – NCB Capital

‘Door is open’ to foreign investors in Aramco IPO – NCB Capital
  • Official figures from Tadawul show that foreign ownership of shares in Saudi Arabia almost doubled in the year to the end of October
  • Samba Financial Group, said recently that demand for the offer was ‘unprecedented’

DUBAI: One of the most senior bankers working on the initial public offering of Saudi Aramco told Arab News that the decision to go ahead without international marketing was a rational one in light of unusually strong regional demand for the share sale.

Sultan Moussa, vice president of investment at NCB Capital, said: “It was not an irrational decision. Good sentiments and reasoning came before they made the decision. They did their homework very well before they reached that decision. Given the expressed valuation range reached and the expected demand, it was enough for them to go ahead without international marketing.”

Moussa was speaking in light of criticism from some western bankers of the decision to call off “roadshows” to foreign financial centers like New York and London and concentrate on domestic and regional demand for the record-breaking Aramco IPO.

“The advisers and the banks usually do pre-marketing after the intention to float and the prospectus, before book-building begins. So global investors already have clear visibility on the level of domestic demand. You cannot imagine them taking an irrational decision to halt international marketing when they have that information,” he added.

The NCB Capital executive insisted that foreign investors could still take part in the IPO via the Tadawul’s existing rules for non-Saudi institutions, which have been eased for the IPO. “The door is open for anyone to invest in the IPO,” Moussa said.

“International investors are still allowed to go via the route for qualified financial institutions and they are invited, indeed they are welcome to come into the IPO. If international investors believe in the financials and the fundamentals they do not need to be marketed to further,” he added.

Official figures from Tadawul show that foreign ownership of shares in Saudi Arabia almost doubled in the year to the end of October, now comprising 9.04 per cent of the total.

Another of the Saudi banks working on the IPO, Samba Financial Group, said recently that demand for the offer was “unprecedented” and that the value of orders was touching $20bn, against a top-end target of $25.6bn, with 10 days to go until the offer closes.

Moussa declined to comment on the level of take up. “The local banks are individually responsible for the book and you cannot say where it is in aggregate at the moment,” he said.

Aramco is selling three billion shares in the IPO at around $8.74 per share, making it the biggest share offering in history.


UK economy shrinks by 2.6% in November, first drop since April

UK economy shrinks by 2.6% in November, first drop since April
Updated 15 January 2021

UK economy shrinks by 2.6% in November, first drop since April

UK economy shrinks by 2.6% in November, first drop since April
  • The fall in gross domestic product much lower than the average forecast for a 5.7 percent drop

LONDON: Britain’s economy shrank by 2.6 percent in November, the first monthly fall in output since the depths of an initial COVID lockdown in April, as new restrictions were imposed on much of the country to slow the spread of the disease.
The fall in gross domestic product reported by the Office for National Statistics was much lower than the average forecast for a 5.7 percent drop in a Reuters poll of economists.
The Bank of England estimates Britain’s economy shrank by just over 1 percent over the final three months of 2020, and with a new lockdown in place since January the country is likely to have fallen into a double-dip recession.
The BoE ramped up its bond-buying program to almost 900 billion pounds in November and Governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed.