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Bankers To Get In On IPO Despite Aramco Attacks

Pipelines aramco

A little more than a week has past since the attacks on Saudi Aramco took offline more than 5 million barrels per day, but Crown Prince Mohammed bin Salman and bankers interested in taking part in the IPO are wasting no time in pushing forward with the Aramco IPO.

It’s full steam ahead for the IPO, despite setbacks like the attacks on its oil infrastructure and the indecisiveness on a suitable listing venue for what will be the world’s largest IPO ever.

Aramco is expected to hold meetings this week with more than a dozen junior underwriters, according to Bloomberg sources. The meetings will be held on Wednesday and Thursday, the sources say, and will consist of analyst presentations with their banks’ research teams. Senior banks that will be part of the IPO are meeting now in preparation, working around the clock in order to have their ducks in a row by November, should Aramco be ready to move within that timeframe.

Bookrunners for the deal flew to the Middle East over the weekend for meetings with Aramco that started on Monday as well.

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Add to that the fact that Aramco has approached—or strong-armed, depending on the source—a litany of wealthy nationals to discuss them becoming anchor investors in the Aramco IPO, and the public message is clear: nothing is going to stop the IPO—not even attacks on its oil infrastructure. But investors may disagree. It is unclear how many investors may be turned off by the increased security risks, and how many will still find an Aramco investment attractive despite the security issues.

Whether Aramco brings back online all of its production within a matter of a week or whether it takes eight months will have a huge effect on investor appetite for the IPO. If Aramco is truly able to make repairs and increase production quickly, investors may be more forgiving when it comes to the inherent risk in Middle Eastern oil.

But if it takes eight months as some have suggested, the IPO could be delayed due to lack of investor interest, and since the plan is for the IPO to bankroll MbS’ grand Vision 2030 plan, a long recuperation might mean MbS will have to rename it Vision 2040.

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on September 24 2019 said:
    Read my lips. The original Saudi Aramco IPO will never see the light of day now or ever because of persistent question marks about the actual size of Saudi proven oil reserves and also because of the US Congress-approved legislation relating to 9/11.

    What could eventually emerge is a smaller petrochemical IPO since investors could see petrochemical assets like refineries and plants but can’t be sure about reserves without a truly independent audit.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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