It's not news that Saudi Arabia is planning an IPO of Aramco, the state's oil company. It will be perhaps valued at near $2 trillion, and the Kingdom is also planning to issue $15 billion worth of bonds. Since the beginning of the year, IB fees have jumped to $100m in Saudi Arabia. This, of course, is their government's increased paced of diversification.
Two HSBC bankers recently jumped to government roles...HSBC and JPMorgan, along with Citigroup Inc., were picked just days ago to arrange the kingdom's first international bond offering...JPMorgan advised the Saudi Public Investment Fund on its $3.5 billion investment in Uber Technologies Inc. this month.
It is clear that JPMorgan, as Saudi Arabia's decade old advisor is in the lead to secure a prominent position in the impending IPO. It is followed closely by HSBC. Almost all other banks are snapping at their heels, however. For example, DB recently promoted a Saudi national as the Middle East-Africa CEO.
The deal fees are estimated to be at least $50m. Does everyone think this is accurate? Do you have any other thoughts particularly relating to the specific promotion of regional (E)MEA bankers?
Get to know the Saudi Arabian situation: http://www.bloomberg.com/quicktake/saudi-arabia-e… Original Bloomberg article: http://www.bloomberg.com/news/articles/2016-06-28…
Anybody have a clue on what sort of yield these guys are looking for those bonds?
Promoting employees ONLY for gaining favours is weak. Hire and fire lol
Aside from the deal itself, just curious how more knowledgable folks feel about going long individually on Aramco?
Am I ignorant in assuming this will appreciate significantly once they eventually scale back production?
I'm not sure I would touch it. Unless something has changed, and they magically release state secret reserves and other information, this is really a black hole.
Im looking forward to seeing some of the first filings. If they provide detail on reserves and production it could be a good investment. My biggest issue would be knowing that shareholders would have no control over the direction of the company.
The person also said the offering likely will be smaller than current figures suggest and likely will include only the company’s refining and petrochemical arms.
The company manages but doesn’t own the kingdom’s reserves, and a number of Saudi experts and insiders have said Saudi Arabia wouldn’t include its production assets in any listing.
Its methods and reserves are tantamount to state secrets.
From the wall street journal directly. That, is my biggest issue. It will be setup where you get a piece of the action, but no real idea what that action is.
Like Addinator said, I'd stay away. As a public company they'll have to be more transparent and there can be so many controversies related to business in the middle east once the rest of the world sees whats going on. For example they could be mistreating their workers, huge sexism issues, abuse of power, etc.
Of course this is all speculation, the companies could be a bunch of jolly dudes and dudettes working together to get oil, but it's likely the way things have been in the middle east that the way they run their business could severely hamper an IPO and could cause a fall.
I'd also stay back and see how things play out first before indulging.
I thought you were going to talk about every banker dreaming about quitting their jobs.
Make the money and then quit haha
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Not to play pessimism here, but the old saying goes, "If it's too good to be true it probably is."
But it should be totally valid. Saudi Arabia is placing diversification at the top of its priorities list, and banks want a piece of that pie.
You'd almost have to pay me to get me to invest in Aramco. Almost. Oil prices are tanking, and nobody really knows how much oil Aramco has in stock. Might as well go to Vegas and put it all on black. Hell, at least with the casinos you know approximately how much you're getting screwed by.
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