Skip to main content

Saudi Aramco has formally asked major banks to submit proposals for potential roles in its planned initial public offering, two sources said, in what could be the world’s biggest IPO.

Aramco’s planned IPO, which could potentially raise $100 billion, is the centrepiece of Saudi Arabia’s economic transformation drive to attract foreign investment and diversify away from oil.

Request for proposals were sent to banks few days day ago, they said.

Story continues below advertisement

Aramco declined to comment.

The formal IPO process follows Saudi Arabia’s Crown Prince Mohammed bin Salman’s comments in June that the government remained fully committed to the IPO, expecting it to take place between 2020 and early 2021, after it was postponed last year.

His comments triggered a series of approaches by international investment banks which wanted to be involved, Reuters had reported citing sources.

Work on the deal, which proposed a listing in Riyadh and an international exchange, was halted in 2018 when Aramco began a process to acquire a 70 per cent stake in petrochemicals maker Saudi Basic Industries Corp.

A third source familiar with said the move to ask banks to pitch was a key step toward the IPO going ahead, unless market conditions worsen or there is some major geopolitical event to cause a further delay.

VALUATION

But the IPO may face some obstacles such as a rich valuation at a time of volatile oil prices.

Prince Mohammed had put a $2 trillion valuation on the state company in early 2016 when he first proposed a share sale to diversify Saudi Arabia’s economy beyond oil.

Story continues below advertisement

Some bankers and company insiders say the kingdom should trim its target to around $1.5 trillion, Reuters reported earlier this month, citing industry and banking sources.

The IPO process could formalize roles for some of the banks that had been previously working on the transaction, one of the sources said.

Before the IPO process was halted, JPMorgan, Morgan Stanley and HSBC were picked to play a leading role in the world’s biggest ever IPO when the plan was first announced in 2016.

Boutique investment banks Moelis & Co and Evercore were also hired by Aramco as independent advisers, sources had said at that time.

State-run Aramco began publishing its results in preparation for its first international bond sales, which showed Aramco is the world’s most profitable company.

Aramco also recently signed a letter of intent to take a 20 per cent stake in Indian company Reliance’s oil-to-chemicals business in one of the largest ever foreign investments in India.

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter