Saudi Arabia’s potential initial public offering of its state oil company could be the largest ever, a juicy target for any ambitious Wall Street bank. In a country traditionally cold to outsiders, only a few have the experience to win it.
JPMorgan Chase & Co. and HSBC Holdings Plc are among international lenders in the best position to win a role if the kingdom goes ahead with an IPO of Saudi Arabian Oil Co., or Aramco, people familiar with the matter said. The two banks — whose presence in the kingdom goes back decades — helped arrange a $10 billion loan for the company last year.
Deutsche Bank AG, which advised Aramco on its $3 billion joint venture with Lanxess AG in September, may also be a favorite to be hired for a role, the people said, asking not to be identified as the information is private. Aramco will also likely appoint some of its key local lenders from the kingdom for the IPO, the people said. No mandates have been awarded yet and Aramco hasn’t sent out requests seeking advisory roles, they said.
The company is likely to choose banks that have helped arrange its loans and other local deals in the past, putting firms with less experience in the country — such as Goldman Sachs Group Inc. and Morgan Stanley — at a potential disadvantage, the people said.
Representatives for JPMorgan, Deutsche Bank, Goldman Sachs and Morgan Stanley declined to comment. Representatives for HSBC didn’t immediately comment.
HSBC and JPMorgan are the only two foreign lenders ranked among the top 10 IPO advisers in the kingdom in the last decade, at 2nd and 4th position respectively, according to data compiled by Bloomberg. Investment banks like Goldman Sachs and Morgan Stanley, which lead the charts globally during the same period, have not been as active in Saudi Arabia, where the markets have been largely closed to international investors.
