Page 7 - MEOG Week 46

MEOG FInanCe & InVestment MEOG
Aramco fires starter’s pistol on $1.71tn IPO
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SAUDI Aramco’s initial public offering (IPO) is set to value the company at $1.6 trillion-$1.71 trillion according to an announcement by the state oil firm this weekend, with the final price to be announced on December 5.
The company’s domestic roadshow began on November 17 and the bookbuilding will con- tinue until November 28 for retail investors and December 4 for institutional investors.
Up to 0.5% of the company, or $8.5bn has been set aside for retail investors, based on the aforementioned valuation.
Despite mention in the prospectus of shares being made available to foreign, non-US individ- uals, an addendum suggests that it will be open only to domestic entities and individuals.
The prospectus, which was published a week ago, said that non-resident, non-Saudi nationals would be able to acquire shares via swap deals with people authorised by the Capital Market Authority (CMA), the Saudi central bank.
Private investors buying shares who hold them for a period of six months after trading begins will receive bonus shares up to a total of
100 shares.
The government of Saudi Arabia undertook
to impose a temporary moratorium on the sale of additional shares to the public for a six- month period after trading begins. however, this ban does not apply to sale of equity stakes to state-owned sovereign wealth funds or strategic investors.
Aramco also committed not to engage in share dilutions during the first six months of trading.
Interestingly, no local or international bank is underwriting the issuance.
For its part, the Saudi government has been reported to have “strongly encouraged” wealthy Saudi merchant families to participate in the IPO and has instructed local banks to offer lenient credit terms to borrowers willing to participate in the offering.
The proceeds of the Aramco IPO are thought to be the cornerstone of Crown Prince Mohamed Bin Salman’s (MBS) economic diversification strategy for the kingdom’s economy away from its oil dependency.™
Russia clears Saudi purchase of Novomet stake
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rUSSIA’S commission on foreign investment control has cleared a joint bid by Saudi oil giant Saudi Aramco, the Saudi Public Investment Fund (PIF) and the russian Direct Investment Fund (rDIF) for a 30.76% stake in Perm-based oilfield equipment supplier Novomet.
The approval was announced by the head of russia’s Federal Antimonopoly Service (FAS), Igor Artemyev, to reporters on November 14. The commission, set up in 2008 to vet largescale acquisitions in russia by international investors, also last week greenlit the purchase by Finnish energy group Fortum of a 20.5% in German counterpart Uniper, which has assets in russia.
The owner of the Novomet stake is russia’s government-run rusnano. Aramco and PIF will together take a 20.5% stake in Novomet, whose main business is the production of elec- tric submersible pumps, for rUB5bn ($78mn). The remaining 10.2% will be sold to rDIF for rUB2.5bn.
rusnano unveiled plans to divest from
Novomet in 2016, with US-based halliburton later filing a bid to buy 100% of the equipment manufacturer from rusnano and local private equity firms Baring Vostok and russia Partners Management. But the deal was held up by rus- sian regulators over the risk of potential new US sanctions that could restrict Novomet’s business activity.
Novomet is viewed by russia as a strategic asset, given its importance to the russian oil industry at a time when Moscow is looking to build up domestic manufacturing and substitute imports.
Aramco, PIF and rDIF then stepped for- ward with a joint offer in October last year. The commission’s clearance follows high-level talks between russia and Saudi Arabia that took place during a state visit to the Kingdom by russian President Vladimir Putin last month. During the visit the three buyers signed a confirmation agreement on the purchase, which Aramco expects to close early next year.™
Week 46 20•November•2019 w w w . N E W S B A S E . c o m P7