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In a sign that it is trying to ensure that its highly anticipated IPO will take place this year, Saudi Aramco is seeking to obtain up to US$6 billion in cheaper loans before the share sale, taking advantage of banks that are willing to boost ties with the Saudi oil giant and position themselves for roles in the IPO, Reuters reported on Wednesday, citing sources at banks and export credit agencies.
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.
“There’s momentum for Aramco to tap this form of financing. If they did it after the IPO, they’d have to pay more,” one banker told Reuters.
The Saudi oil firm has invited banks vying for roles in the IPO for meetings in Saudi Arabia at the end of January and early February to present their cases, banking sources told Reuters earlier this week.
Goldman Sachs, Citi, and Deutsche Bank executives are expected to attend the meetings. Those three banks are also said to be in the lead to win big roles in Aramco’s IPO.
Last month, Saudi Aramco was said to be seeking by the end of 2017 proposals from banks willing to be global coordinators and bookrunners of the sale of 5 percent of the oil giant that could bring Saudi Arabia US$100 billion, if Saudi officials’ valuation of the company at US$2 trillion stands.
Saudi officials have claimed that Aramco’s value is US$2 trillion, although analysts value the Kingdom’s oil giant at much less, with the majority putting the valuation at between US$1 trillion and US$1.5 trillion.
Last week, Aramco was made into a joint stock company in preparation for its IPO. The company has a fully paid capital of US$16 billion (60 billion riyals) divided into 200 billion ordinary shares, and a board of eleven directors who will be in charge of the company’s listing.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.