Saudi Aramco float shuns global banks for local investors

By Hazel Davis

Oil giant’s IPO was scaled down after weaker-than-expected foreign demand

The Saudi Arabian Oil Company (Saudi Aramco) has scaled down its IPO, leaving global banks on the sideline.

The world’s most profitable corporation has asked local brokers to sell shares to domestic investors. This marginalises the likes of 0'>JPMorgan Chase and 0'>Morgan Stanley who have been working up to the sale for years.

Of the 25 banks on the IPO, only three – Saudi Arabia’s NCB Capital and Samba Capital and 0'>HSBC, which has a greater local presence – will now have oversight of investor orders.

When the IPO was first announced, foreign fund managers shied away from Crown Prince Mohammed bin Salman’s initial expectations of $100bn (377bn) on a 5 per cent sale. Thanks to weak foreign demand, it now seeks about $25bn, from a 1.5 per cent sale on the Saudi Tadawul exchange.

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It is thought that global coordinators, including Bank of America, Citigroup, Credit Suisse and Goldman Sachs, will now submit their orders to HSBC, with NCB and Samba compiling regional orders. The share sale could take place as soon as December 2019.

FURTHER READING: Saudi Aramco valued at $1.7 trillion ahead of flotation

FURTHER READING: Saudi Aramco appoints first woman to lead overseas office in build up to IPO

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