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Saudis Want Richest Families As Anchor Investors In Aramco IPO

Riyadh night

Saudi officials have approached some of the richest families in Saudi Arabia about potentially becoming anchor investors in the initial public offering (IPO) of state oil giant Aramco, Bloomberg reported on Monday, citing five people familiar with the discussions.

Saudi Aramco could hold more formal meetings with some of the Kingdom’s wealthiest business families next week, after it will have appointed banks to manage and lead the much-hyped 5-percent sale in the world’s biggest oil company, some of Bloomberg’s sources said.

Oddly enough, some of the families approached to be anchor investors—such that would ensure a successful sale in the Aramco IPO—have relatives that were part of the 2017 purge when Saudi Arabia’s leadership locked officials and businessmen in the Ritz-Carlton hotel in Riyadh in what the rulers said was an anti-corruption drive.

According to one of Bloomberg’s sources, Saudi Arabia now looks to have the richest families take at least 1-2 percent of Aramco as anchor investors, while the amount would depend on the total valuation of the company, which the Kingdom continues to expect to be US$2 trillion and even more.

Last week, Saudi Arabia started to move toward a fast-track of Aramco’s IPO, after Khalid al-Falih lost his role as chairman of the board for Saudi Aramco, and as of this weekend, he is also not the Kingdom’s energy minister, replaced by Abdulaziz bin Salman, the King’s son and half-brother of Crown Prince Mohammed bin Salman.

Related: U.S. Drillers Reduce Staff And Budgets As Oil Prices Stay Low

The broader shake-up at the energy and mining ministry and at Aramco signals that the Saudi leadership wants the IPO done quickly and wants people who are very supportive of this process, Helima Croft of RBC Capital Markets told CNBC last week.

Aramco is ready for listing, but it will be the company’s only shareholder, the Kingdom of Saudi Arabia, that will decide when the IPO will take place, the world’s largest oil producing firm said last month.

Saudi Arabia’s new energy minister, Abdulaziz bin Salman, said on Monday in his first public comments after taking over from al-Falih that the Kingdom aims to have the IPO take place “as soon as possible.”  

By Tsvetana Paraskova for Oilprice.com

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