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Wednesday, 22 February 2017

Aramco golden ticket has risks for Western banks | Reuters

Aramco golden ticket has risks for Western banks | Reuters:

"JPMorgan and Morgan Stanley have been handed the keys to the kingdom. The U.S. investment banks are poised to lead the underwriting of Aramco's $100 billion share offering. The prized mandate has the potential to propel both to the top of investment banking league tables and unlock a stream of future work as Saudi Arabia reforms its economy and sells off its large inventory of state assets. An IPO flop, however, could be fatal for the banks' local franchises. The state-owned oil giant is assembling bankers ahead of the listing, which is scheduled for 2018. JPMorgan and Morgan Stanley look set to join boutique firm Moelis, which was appointed as an independent adviser earlier this month, and veteran banker Michael Klein, who has been working for months at Aramco's headquarters in Dhahran. HSBC could also be handed a mandate to help secure Chinese investors, Reuters reported on Wednesday. A leading role would be a big win for JPMorgan and Morgan Stanley, both of which rank outside the top five for fees earned on IPOs in the Middle East since 2010, according to Thomson Reuters data. The banks will have to share the stage with rivals as Aramco seeks to drum up support for what would be the world's largest-ever IPO. A bonanza is far from assured: competition to help with the restructuring of the Middle East's largest economy is fierce, and Riyadh has the upper hand in negotiations over fees. Nevertheless, a leading role on what is likely to be an intricate multi-exchange listing will help secure other more lucrative mandates as the reform plans of Deputy Crown Prince Mohammed bin Salman take shape. JPMorgan and HSBC had strengthened their credentials by arranging Saudi Arabia's $17.5 billion debut international bond offering last year, which was four times oversubscribed."



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