‘Door is open’ to foreign investors in Aramco IPO


One of the most senior bankers working on the initial public offering of Saudi Aramco said that the decision to go ahead without international marketing was a rational one in light of unusually strong regional demand for the share sale.
Sultan Moussa, vice president of investment at NCB Capital, said: “It was not an irrational decision. Good sentiments and reasoning came before they made the decision. They did their homework very well before they reached that decision. Given the expressed valuation range reached and the expected demand, it was enough for them to go ahead without international marketing.”
Moussa was speaking in light of criticism from some western bankers of the decision to call off “roadshows” to foreign financial centers like New York and London and concentrate on domestic and regional demand for the record-breaking Aramco IPO.
The advisers and the banks usually do pre-marketing after the intention to float and the prospectus, before book-building begins. So global investors already have clear visibility on the level of domestic demand. You cannot imagine them taking an irrational decision to halt international marketing when they have that information, he added.
The NCB Capital executive insisted that foreign investors could still take part in the IPO via the Tadawul’s existing rules for non-Saudi institutions, which have been eased for the IPO. The door is open for anyone to invest in the IPO, Moussa said.
International investors are still allowed to go via the route for qualified financial institutions and they are invited, indeed they are welcome to come into the IPO. If international investors believe in the financials and the fundamentals they do not need to be marketed to further, he added.
Official figures from Tadawul show that foreign ownership of shares in Saudi Arabia almost doubled in the year to the end of October, now comprising 9.04 per cent of the total.
Another of the Saudi banks working on the IPO, Samba Financial Group, said recently that demand for the offer was “unprecedented” and that the value of orders was touching $20bn, against a top-end target of $25.6bn, with 10 days to go until the offer closes.
Moussa declined to comment on the level of take up. The local banks are individually responsible for the book and you cannot say where it is in aggregate at the moment, he said.
Aramco is selling three billion shares in the IPO at around $8.74 per share, making it the biggest share offering in history.

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