What ‘Aramcologists’ say abut biggest IPO in history

Much like the now-obsolete art of “Kremlinology” — the study of the inner workings of the Soviet political system via analysis of announcements and reports — there is now a growing field I like to call “Aramcology.”
The forthcoming initial public offering (IPO) of Saudi Aramco is of such importance to the economic future of the Kingdom and its citizens that every small news item about, or company announcement from, the Saudi oil giant is sieved, weighed and analyzed by a growing global circle of Aramcologists, in which I include myself.
I imagine the world’s biggest investment banks, lawyers, accounting firms and consultants — which stand to make aggregated billions of dollars from the IPO — have their own Aramcology departments full of bright young things all eagerly devouring and interpreting snippets of information that come out of Dhahran.
Earlier this week, speculation went into overdrive with reports from Bloomberg and Reuters that a more-or-less definitive list of financial advisers had been drawn up and invited to pitch their proposals for the IPO.
Most significant among the list of names the two agencies produced were three banks that had hitherto not been publicly linked with the IPO process: Goldman Sachs, Citibank and Deutsche Bank. They were added to a list of potential advisers, with a global “book-running” (price setting) role in the IPO, alongside existing names HSBC, JP Morgan and Morgan Stanley.
Add in other smaller advisory firms already linked to Aramco, like Moelis & Co., Evercore, and the American financial wizard Michael Klein, and that becomes a pretty comprehensive list of the most powerful and influential financiers in the world.
Both Reuters and Bloomberg said that none of the named banks would comment on their reports, and the bankers I have spoken to since are similarly insisting on official silence. But there is enough off-the-record guidance and intra-bank gossip to suggest that the reports are largely accurate.

Hiring the world’s biggest and best banks suggests a global ‘big bang’ flotation is still on the cards.

Frank Kane

If so, what do the reports mean for the IPO? Chewing it all over with fellow Aramcologists, we agreed on a few broad themes.
First, hiring the world’s biggest and best banks means that neither Aramco nor the owner, the government of Saudi Arabia, has given up on the idea of a global “big bang” flotation for the company.
The idea of a $100 billion IPO of 5 percent of the total shares — the biggest in history and four times the size of the current record-holder — was floated along with the original announcement of the intention to privatize part of Aramco under the Vision 2030 strategy to reduce the Kingdom’s economic dependence on oil.  formation that come out of Dhahran.

Earlier this week, speculation went into overdrive with reports from Bloomberg and Reuters that a more-or-less definitive list of financial advisers had been drawn up and invited to pitch their proposals for the IPO.
Most significant among the list of names the two agencies produced were three banks that had hitherto not been publicly linked with the IPO process: Goldman Sachs, Citibank and Deutsche Bank. They were added to a list of potential advisers, with a global “book-running” (price setting) role in the IPO, alongside existing names HSBC, JP Morgan and Morgan Stanley.
Add in other smaller advisory firms already linked to Aramco, like Moelis & Co., Evercore, and the American financial wizard Michael Klein, and that becomes a pretty comprehensive list of the most powerful and influential financiers in the world.
Both Reuters and Bloomberg said that none of the named banks would comment on their reports, and the bankers I have spoken to since are similarly insisting on official silence. But there is enough off-the-record guidance and intra-bank gossip to suggest that the reports are largely accurate.

Hiring the world’s biggest and best banks suggests a global ‘big bang’ flotation is still on the cards.

Frank Kane

If so, what do the reports mean for the IPO? Chewing it all over with fellow Aramcologists, we agreed on a few broad themes.

First, hiring the world’s biggest and best banks means that neither Aramco nor the owner, the government of Saudi Arabia, has given up on the idea of a global “big bang” flotation for the company.
The idea of a $100 billion IPO of 5 percent of the total shares — the biggest in history and four times the size of the current record-holder — was floated along with the original announcement of the intention to privatize part of Aramco under the Vision 2030 strategy to reduce the Kingdom’s economic dependence on oil.

Categories: Americas, Arab World, Asia, Saudi Arabia

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