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Saudi Aramco said to pick Moelis to advise on biggest IPO

Thursday, February 9, 2017 - 00:22

[RIYADH] Saudi Arabian Oil Co hired Moelis & Co to advise on its initial public offering, according to people familiar with the matter, as it pushes ahead with plans to pursue the world's biggest share sale.

The boutique investment bank had been shortlisted along with Evercore Partners Inc. as a potential adviser for the deal, people familiar with the matter said last month. Aramco, as the company is known, was seeking a bank to help it select underwriters for the sale, make decisions on potential listing venues and ensure the IPO goes smoothly, the people said at the time.

The mandate is a coup for New York-based Moelis, a firm founded in 2007 by former UBS Group AG dealmaker Ken Moelis. While the bank has advised on other large deals in the Middle East, such as the US$25 billion debt restructuring of Dubai World LLC, this listing is its biggest ever role.

"Transactions of this magnitude clearly elevate the perception of the brand," Devin Ryan, an analyst at JMP Securities, said in a note to clients. "Publicity from a high-profile win represents great advertising for Moelis, which can have tangible benefits, as success often begets more success." Moelis jumped 5 per cent to US$36.75 at 9.40 am in New York, extending its gain in the past 12 months to 48 per cent. The company sold stock for US$25 a share in its 2014 initial public offering. Mr Ryan, who has an outperform rating on Moelis, said its reasonable to estimate a fee for the Aramco deal could be "in the tens of millions of dollars." The Aramco IPO, which is predicted to raise about US$100 billion, would also push Moelis up in global investment bank rankings. The company ranked 28th in mergers and acquisitions announced last year, according to data compiled by Bloomberg.

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Representatives for Moelis and Aramco declined to comment. Moelis is scheduled to report fourth-quarter earnings Wednesday after the close of trading in US markets. The Financial Times had previously reported that Moelis won the advisory role.

Saudi Arabia is aiming to sell less than 5 per cent of the company as part of a plan 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. The IPO would be the largest ever, dwarfing the US$25 billion raised by Chinese Internet retailer Alibaba Group Holding Ltd in 2014.

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