Saudi Aramco recruits JPMorgan, Morgan Stanley for IPO, HSBC a contender: source

Wed Feb 22, 2017 10:10am EST
 
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By Mike Stone, Tom Arnold and Sumeet Chatterjee

(Reuters) - Oil giant Saudi Aramco [IPO-ARMO.SE] has asked JPMorgan Chase & Co and Morgan Stanley to assist with its mammoth initial public share offer and could call on another bank with access to Chinese investors, a source with direct knowledge of the matter said.

The U.S. banks have joined boutique investment bank Moelis & Co in winning coveted roles in what is expected to be the world's biggest IPO, worth some $100 billion.

HSBC Holdings Plc has emerged as the leading contender for a role among a list of five banks that could provide a pipeline to Chinese investors - an important part of the offering, the source said, adding that the other four are Chinese banks.

Industrial and Commercial Bank of China International Holdings, a wholly-owned Hong Kong-based subsidiary of Industrial and Commercial Bank of China , and China International Capital Corporation (CICC) are among the Chinese banks pitching for the deal, two other sources familiar with the matter said.

"This will give Chinese banks a bit of an opportunity to flex their muscles and show that they have the firepower to get involved in such a large, global deal,” said Benjamin Quinlan, CEO of financial services consultancy Quinlan & Associates.

"There will also be a strategic interest from the government side to have some China role in the IPO process given the role Saudi Aramco plays in the resources sector there. So, there is a political undertone to it as well."

The growing Chinese interest in Aramco's IPO comes ahead of King Salman's visit to Asia next week.

The final line-up for banks working on the IPO could still be adjusted, the first source said.   Continued...

 
A Saudi Aramco employee sits in the area of its stand at the Middle East Petrotech 2016, an exhibition and conference for the refining and petrochemical industries, in Manama, Bahrain, September 27, 2016. REUTERS/Hamad I Mohammed