Aramco Said to Hire JP Morgan, Morgan Stanley, HSBC for IPO Roles

(Bloomberg) - Saudi Arabian Oil Co. has appointed JPMorgan Chase & Co., Morgan Stanley and HSBC Holdings Plc for key roles on its initial public offering, according to people familiar with the matter, as it moves ahead with its plans for what could be the world’s biggest share sale.

The global banks will act as advisers on the listing, the people said, asking not to be named because the discussions are private. A representative for Aramco, as the company is known, said it doesn’t comment on rumors or speculation. Representatives for JPMorgan and Morgan Stanley declined to comment. HSBC didn’t immediately respond to a request. The appointments were reported earlier by Reuters.

The banks will join Moelis & Co., Evercore Partners Inc. and Michael Klein, the former Citigroup Inc. investment banker, which have already won roles, people familiar with the matter said previously.

Saudi Arabia is aiming to sell as much as 5 percent of the company as part of a plan by Deputy Crown Prince Mohammed bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons. The IPO could be the largest ever, based on the Saudi government estimates of a $2 trillion valuation for the company, dwarfing the $25 billion raised by Chinese internet retailer Alibaba Group Holding Ltd. in 2014.

To facilitate the IPO, the kingdom slashed the tax rate paid by the state oil producer to 50 percent from 85 percent, a key milestone, potentially raising its valuation to more than $1 trillion, according to estimates by Sanford C. Bernstein & Co. The cut will boost Aramco’s net income by 300 percent, putting per-barrel profitability in a range similar to that of international oil companies and allowing it to trade in-line with Western peers, such as Exxon Mobil Corp., Bernstein analysts said.

To contact the reporters on this story: Dinesh Nair in London at dnair5@bloomberg.net ;Wael Mahdi in Kuwait at wmahdi@bloomberg.net ;Archana Narayanan in Dubai at anarayanan16@bloomberg.net ;Ruth David in London at rdavid9@bloomberg.net To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net Amy Thomson, Vernon Wessels

Copyright 2017 Bloomberg News.

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