Largest IPO in History - Thoughts?

RoyDalio's picture
Rank: Baboon | 136

Saudi Aramco hired Moelis and Lazard as advisors for the IPO. They'll probably hire more banks further down the line, but what do all the monkeys think about this? How many banks are going to be involved by the time the IPO happens, and why didn't they go with a BB? Is the $2tn valuation really justified?

Comments (11)

Aug 22, 2019

Apparently the fees on this IPO are uncharacteristically low, hence why Evercore dropped out:

https://uk.reuters.com/article/us-saudi-aramco-ban...

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Aug 22, 2019

Interesting. The article doesn't mention why fees are so uncharacteristically low, so maybe that's just a Saudi thing? Not sure.

There's no nobility in poverty.

Most Helpful
Aug 22, 2019

Well the higher the demand the lower the fees. Banks will reduce their fees to be on the deal and especially further deals with them down the line given how cash generative the firm is

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Aug 22, 2019

It's nice when you can tell clients you worked on the biggest IPO in history

Aug 24, 2019

If I'm giving you a $2 trillion IPO, then I'm paying you the fees I fucking wanna pay you, and these banks will be happy. This isn't a $2 billion IPO for a run of the mill iPhone app that has significant VC ownership and whose VCs have ties and loyalties to the banks. This is a $2 trillion IPO entirely owned by the Saudis.

I work in Asset Management, and if a small hospital is going to give us $20 million to manage a sleeve of their equity portfolio, they're going to pay a lot higher rate than if CalPERS were to give us $500 million for the same strategy.

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Aug 23, 2019

I wouldn't wait with bated breath on this one. It was supposed to be listed over 3 years ago.

I guess syndicators are having a hard time pricing in some of the "unique" aspects of Aramco - like mgmt refusing to have a third independent party quantify its oil reserves or the shoddy cleaning services it offers in its embassy in Istanbul.

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Aug 23, 2019

Can't wait to see how they refer to the latter in the risks section of the S1:

"We are inclined to execute enemies of the state with bonesaws."

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Aug 23, 2019

this story has come and gone many times over the past decade. I remember JP Morgan used to be mentioned prominently in these articles, are they not involved anymore?

The Saudi's are absolutely cucking us on this. Apparently senior bankers have flown all the way there only to have their meeting cancelled as they wait in the lobby.

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Aug 23, 2019

Kids these days, I believe, call this a 'flex'.

Disclose massive, record setting profits for a corporate entity, dangle the carrot of diversification out in front of investors, etc, etc, etc.

The reality here is that they are playing with everyone, and probably using this as leverage within the kingdom to achieve some power play agenda - strong arming princes into dialing back spending, shutting up, or otherwise... who even knows.

The bigger question is why on earth would Aramco go public at this point? It's not like they need the outside capital... maybe as a show of 'opening' to the world... bu again, do they really care? The hassles that come with even a minor, partial listing can't possibly be worth it for them.

To the valuation? Who the hell knows. No matter what you will not be getting paid for the risk in this deal. What does the income statement look like - does it include line items for all the social benefits it funds? Prince salaries? Does cap ex include new palaces? More to the point - it's not a growth stock. You are buying, what, a hopeful dividend stock that could get re-nationalized at any moment.... good lord. Just by Exxon and call it a day.

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Funniest
Aug 23, 2019

Kind of surprising they're even considering US banks for this. You'd think they'd go with a bank that has a more... acute expertise at dealing with psychotic dictatorships.

May I suggest Deutsche?

"Work ethic, work ethic" - Vince Vaughn
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Aug 24, 2019
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No pain no game.