‘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

  • 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.


Airbus agrees to settle corruption probes with US, France and UK

Updated 10 min 2 sec ago

Airbus agrees to settle corruption probes with US, France and UK

  • Airbus said it could not comment on precise details regarding its talks with authorities
  • The European planemaker had already fired more than 100 people over ethics and compliance issues
PARIS: Airbus has agreed in principle to a settlement with French, British and US authorities over an investigation into allegations of bribery and corruption, it said on Tuesday.
The European planemaker has been investigated by French and British authorities for suspected corruption over jet sales dating back over a decade. It has also faced US investigations over suspected violations of export controls.
Airbus, which dominates with US rival Boeing the commercial airliner market, said it could not comment on precise details regarding its talks with authorities, including how much it expected to pay out in the settlements. Some press reports suggested a figure of around €3 billion ($3.3 billion).
Nevertheless, Airbus shares rose, as analysts and traders welcomed the fact that Airbus was managing to draw a line under the affair.
“Airbus confirms that it has reached agreement in principle with the French Parquet National Financier (PNF), the UK Serious Fraud Office (SFO) and the US authorities,” the Franco-German company said in a statement.
“These agreements are made in the context of investigations into allegations of bribery and corruption as well as compliance with the US International Traffic in Arms Regulations (ITAR). They remain subject to approval by French and UK courts and the US court and regulator,” it said.
Analysts at brokerage Jefferies welcomed the settlement, although they wrote in a note to clients that the reported cost of €3 billion was “toward the upper end of what we thought probable.”
A traders’ note from Bank of America (BofA) said the settlement removed a negative “overhang” on the stock.
Airbus had already fired more than 100 people over ethics and compliance issues as a result of its own probe into the corruption allegations.
The investigations by British and French authorities began after Airbus drew the attention of regulators to inaccurate declarations it had made to Britain’s export credit finance agency over payments to sales agents. The SFO launched its probe in August 2016, followed seven months later by the PNF.
At the center of the case was a decades-old system of third-party agents or intermediaries run from a now-disbanded headquarters unit which at its height involved some 250 people across parts of the world and several hundreds of millions of euros of payments a year, sources familiar with the matter have said.
A German probe into Airbus for potential misuse of client documents is ongoing.