Tag Archive for: Saudi Aramco
Saudi Arabian Oil Co. picked four banks to advise on its first bond sale, two people familiar with the matter said, ahead of plans for the world’s largest initial public offering.
Saudi Aramco, as the company is known, selected HSBC Holdings Plc’s local unit and Riyad Capital to help with the sale of riyal-denominated Islamic bonds, or sukuk, before the end of June, said the people, asking not to be identified as the information is private.
NCB Capital Co. and Alinma Investment Co. are also working on the deal that could be followed by dollar-denominated bonds, two other people said. The sukuk is part of Aramco’s plans to raise as much as $10 billion in bonds this year, one of the people said. Aramco and HSBC Saudi Arabia declined to comment, while Riyad Capital, NCB Capital and Alinma Investment didn’t respond to requests for comment.
Aramco, the world’s largest oil producer, is preparing to sell bonds ahead of an IPO in 2018. The Saudi Arabian government’s debut offering in October raised $17.5 billion in the biggest-ever emerging-market sale. Middle East and North African countries sold almost $80 billion of bonds last year, the most since Bloomberg started compiling data in 1999.
Although Aramco hasn’t sold bonds before, two of its units have. Sadara Chemical Co., a joint venture between Aramco and Dow Chemical Co., raised 7.5 billion riyals ($2 billion) in 2013, while the company’s joint venture with Total SA sold 3.75 billion riyals of sukuk in 2011.
Saudi Arabia plans to sell less than 5 percent of Aramco as part of plans by Deputy Crown Prince Mohammed bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons. With the government valuing Aramco at $2 trillion, its estimated IPO size would make it the largest ever, dwarfing the $25 billion raised by Chinese Internet retailer Alibaba Group Holding Ltd. in 2014.
Aramco asked banks including Goldman Sachs Group Inc. and HSBC to pitch for an advisory role on the IPO last month, people said at the time.
Despite heavy rains, more than 300 guests gathered at the Houstonian Hotel on Feb. 23 for HBJ’s Conversation with Houston’s Energy Leaders breakfast. The heavy rain served as a metaphor for the current state of the oil industry, and energy leaders offered their take on how to weather the storm for the rest of 2016.
The three panelists approached the current energy market with three different perspectives. Maynard Holt, co-president and co-head of investment bank Tudor, Pickering, Holt & Co., is bullish on the market over the next year, saying that oil could move to between $42 and $50 a barrel, which could open the market to a flurry of activity.
“We’ll be sitting here not too long from now saying, ‘Wow, that hurt, but it’s over and look at all the good things that are happening,'” Holt told the crowd.
And Ron Wagnon, president of Greenwell Energy Solutions, argued that the energy downturn will be a positive for the market in the long run and that it actually needed to happen. His company has been acquisition heavy over the past few years and isn’t shying away from a deal this year either.
“There’s a lot of opportunity out there,” Wagnon said. “The challenge in today’s market is creating a value for the businesses and trying to find flexibility — without access to cash — to do equity trades to bring businesses in the portfolio.”
One of the significant issues with today’s oil downturn is the difference in fortune between the upstream and downstream portions of the industry, Ken Medlock, senior director of the center for energy studies at Rice University’s Baker Institute, said. For those in upstream, the downturn has hit hard, however, the downstream market is doing well if not thriving. Regardless, the Bayou City will still continue to grow economically.
“Houston will weather this storm. The economy will continue to evolve, the energy space will continue to evolve, and Houston will be at the center of that,” Medlock said. “There’s been a lot of interest — particularly from the press — whether or not the transformation of the energy sector will make Houston obsolete, and I would say no, there’s no way that’s going to happen.”
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