Saudi Arabia has excluded Swiss UBS, Bank of America Merrill Lynch, and Barclays from the select group of investment banks invited to pitch for the role of coordinators in the initial public offering of Aramco, five sources told Reuters.
Riyadh, the sources explained, is distrustful of lenders that have not extended loans to it in the last few years, as local corporate culture requires, which is why BofA and UBS have been excluded. As for the reasons for Barclays' exclusion, the sources were not clear.
Yet not all is lost for the three lenders; they could still get more minor roles in the listing as junior advisers or bookrunners. Thomson Reuters data reveals that BofA has not lent any money to Aramco since 2010 based on the lack of reports about loan fees, which for the period between 2002 and 2010 totaled just US$180,000. UBS has no records of any loan fees from Aramco over the 15-year period that Thomson Reuters reviewed.
Those that made the cut, meanwhile, include Goldman Sachs and Deutsche Bank. If they are approved, they will join Citigroup, JPMorgan, and HSBC. JPMorgan is the leader among Aramco lenders, with US$9.5 million from loan fees from the Saudi company since 2002. Citi and HSBC were third and sixth, respectively. Deutsche is in the top 20 lenders to the company and Goldman ranks 34.
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Earlier this month, Reuters reported that Aramco was seeking to obtain up to US$6 billion in cheaper loans before the share sale in a sign that it is trying to ensure that its highly anticipated IPO will take place this year, taking advantage of banks that are willing to boost ties with the Saudi oil giant and position themselves for roles in the IPO.
According to two sources, Aramco could raise at least US$5 billion, backed by export credit agencies, in transactions on which Citigroup, Standard Chartered, and Sumitomo Mitsui Banking Corporation are advising. Aramco wants to obtain loans on which it would later pay lower interests because it still is a wholly state-owned firm that can benefit from cheaper loans for sovereign borrowers
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More