Aramco set for world's biggest IPO, top global banks signed up
RIYADH, April 1, 2017
Saudi Aramco has appointed JPMorgan Chase & Co., Morgan Stanley and HSBC Holdings for key roles on its initial public offering (IPO), said a report citing people familiar with the matter, as it moves ahead with plans for what could be the world’s biggest share sale.
The IPO could be the largest ever, based on the Saudi government estimates of a $2 trillion valuation for the company, dwarfing the $25 billion raised by Chinese internet retailer Alibaba Group Holding in 2014, reported Bloomberg.
The global banks will act as advisers on the listing, the people said, asking not to be named because the discussions are private.
These banks will join Moelis & Company, Evercore Partners and Michael Klein, the former Citigroup investment banker, which have already won roles, people familiar with the matter said previously.
Saudi Arabia aims to sell as much as five per cent of the company as part of a plan by Deputy Crown Prince Mohammed bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons.
To facilitate the IPO, the kingdom slashed the tax rate paid by the state oil producer to 50 per cent from 85 per cent, a key milestone, potentially raising its valuation to more than $1 trillion, according to estimates by Sanford C. Bernstein & Co.
The cut will boost Aramco’s net income by 300 per cent, putting per-barrel profitability in a range similar to that of international oil companies and allowing it to trade in-line with Western peers, such as Exxon Mobil Corp, it added.
