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JPMorgan, Morgan Stanley set for key Aramco IPO role

RIYADH, February 18, 2017

Saudi Arabia is close to appointing leading banks - JPMorgan and Morgan Stanley - as lead underwriters on the initial public offering of Saudi Aramco, the world’s largest oil producer, which is aiming to become the most valuable listed company, said a report.
JPMorgan, Saudi Aramco’s longstanding commercial banker, is in pole position to be a global co-ordinator and bookrunner for the planned sale of a 5 per cent stake in the state-controlled company in 2018, reported Financial Times, citing several people briefed on the flotation process.
Morgan Stanley is also expected to be a global co-ordinator and bookrunner on the listing, said some of these people. The bank held this role on the flotation of Alibaba, which in 2014 set a new record for IPOs by raising $25bn from investors.
HSBC is also tipped for an underwriting role on the Saudi Aramco listing, 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.
Saudi Aramco was scheduled to present a plan about its flotation, including bank appointments, to King Salman bin Abdul Aziz al-Saud for approval at the cabinet’s weekly meeting on Monday, said one banker briefed on the agenda.
The decision on key bank appointments is expected to be taken then, although the timing could slip.
Saudi Aramco’s board is also expected to meet next week and discuss the bank appointments, said the FT report
Banks have scrambled during the past year to secure work on the flotation of Saudi Aramco, which Saudi officials hope could value the company at $2 trillion and therefore enable it to raise as much as $100 billion from investors.
Industry analysts said that even if Saudi Aramco’s market capitalisation fell short of $2tn, it was likely still to be the largest listed company in the world. Apple, at present the world’s most valuable listed company, has a market capitalisation of $710 billion.
The banks that secure the roles of global coordinators on the IPO are expected to secure the largest fees. Bankers have previously said there could be as many as four such co-ordinators because of the sheer scale of the listing, and 20 more banks with junior underwriting roles.
The Financial Times revealed this month that Moelis, a boutique investment bank, had been hired by Saudi Aramco as lead independent adviser on the flotation. 
In this role, it will 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, it added.

Tags: IPO | aramco | Morgan Stanley | JPMorgan |

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