Page 9 - DMEA Week 02 2020

DMEA POLICY DMEA
SAUDI ARABIA
SAUDI Arabia’s national oil company (NOC) Saudi Aramco revealed at the weekend that it had exercised its right to add additional shares to its initial public offering (IPO).
In a statement dated January 12, the com- pany said it had utilised this “greenshoe option,” also known as over-allotment, to offer another 450mn shares within the framework of the IPO programme. This should raise the total value of the issue, which was launched in December, from $25.6bn to $29.4bn, the highest figure ever reported for an IPO.
Saudi Aramco launched the IPO in Decem- ber, floating some 3bn shares on the Tadawul exchange in Riyadh for a starting price of SAR32 ($8.53) apiece. It will not be selling the additional shares on the open market; rather, it has reserved them for investors involved in the book-building process.
“No additional shares are being offered into the market today, and the stabilising manager will not hold any shares in the company as a result of exercise of the over-allotment option,” the company said in its statement.
The NOC also noted that Goldman Sachs, the US-based investment banking and financial services firm, had already released the proceeds of the over-allotment sales to Riyadh during the weekend. Goldman Sachs had been tasked with holding the additional shares during the first month of public trading in Saudi Aramco’s stock.
Show me the money
In related news, Reuters reported earlier this week that the banks that helped the Saudi com- pany co-ordinate its IPO had begun lobbying for additional “incentive fees.” Quoting three unnamed sources who were familiar with the IPO, it said that the banks had asked for more because they believed their earnings from the deal had been relatively low.
Two of the agency’s sources noted that the nine banks appointed to act as joint global co-ordinators of the issue were set to collect less than $5mn each. This is quite a low fee, given that the IPO brought in such a large amount, they commented.
As a result, the sources said, the banks are seeking to convince Saudi Aramco to act in accordance with a clause in their contract that permits the NOC to offer extra money as an incentive in the event of a successful listing. One source said that representatives of the banks were justifying their request for higher compensation by arguing that “incentive fees” would help ensure continued co-operation if the oil company ever opted to sell more shares on international stock exchanges.
As of press time, neither Saudi Aramco nor the banks had commented on Reuters’ report. The NOC named the following banks as its joint global co-ordinators last September: Bank of America Merrill Lynch (US), Citigroup (US), Credit Suisse (Switzerland), Goldman Sachs, HSBC (UK), JPMorgan (US), Morgan Stanley (US), NCB Capital (Saudi Arabia) and Samba Financial Group (Saudi Arabia). ™
Saudi Aramco’s shares are listed on the Tadawul exchange (Photo: Ajel.sa)
 Such was the force of comments that Iran should “come clean” that this was quickly followed by the unusual announcement from Tehran that their earlier statement was incorrect and that one of their missiles had indeed hit the Ukrain- ian plane.
This did not make the accident any less tragic, but for once in this long saga there was some symmetry of statements from the US and Iran.
This may offer some encouragement for those who wish to find a way through the com- peting attitudes of the US and Iran to reach some
form of peaceful co-existence.
On the back of the dramatic events in Iraq
and Iran has come news from the UN stat- ing that the Houthi rebels in Yemen were not responsible for launching of the drone and missile attack on Saudi oil infrastructure last September.
Reuters has quoted its authors from the UN Security Council’s Yemen sanctions commit- tee as saying that “despite their claims to the contrary, the Houthi forces did not launch the attacks on Abuqaiq and Khurais on 14 Septem- b e r 2 0 1 9 .” ™
Saudi Aramco expands scope of IPO through over-allotment
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