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Evercore set to lose out as Aramco reshuffles IPO roles

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Boutique investment bank Evercore Partners has lost the chance to retain a prime position as an independent advisor for Saudi Aramco's potential US$100 billion share sale, as the oil giant revives its postponed listing, three sources said.

[LONDON] Boutique investment bank Evercore Partners has lost the chance to retain a prime position as an independent advisor for Saudi Aramco's potential US$100 billion share sale, as the oil giant revives its postponed listing, three sources said.

The Saudi energy minister Khalid al-Falih, who also chairs Aramco, said earlier in July the long-awaited listing could happen in 2020-2021.

Evercore, founded and chaired by US banker and former politician Roger Altman, had secured an equity advisory role with the oil giant in 2017 for what is expected to be the world's largest ever initial public offering (IPO).

But the relationship between Evercore and Aramco deteriorated, making it difficult for the US advisor to get a new top role, the sources said.

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One of the sources also said that the appeal of Aramco's IPO to Evercore had diminished, due to the relatively low level of fees involved.

An Evercore spokesman declined to comment.

Work on the IPO was interrupted in 2018 when Aramco shifted its attention to the acquisition of a 70 per cent stake in local petrochemicals maker Saudi Basic Industries Corp.

Banks were dismissed, meaning that when the process re-starts they will have to make fresh pitches to the company, two other sources said.

Aramco is expected to formally approach banks for bookrunner roles over the next few weeks, they added.

Alongside Evercore, Aramco chose Moelis & Co and US dealmaker Michael Klein as independent advisors, while JPMorgan , Morgan Stanley and HSBC Holdings Plc were among those to secure leading roles in the IPO.

HSBC, which was chosen as a global coordinator, could now end up with a more marginal role, two of the sources said.

HSBC declined to comment and Saudi Aramco did not respond to a request for comment.

Although Saudi Aramco is known for having paid relatively low banking fees in the past, banks competed fiercely for an IPO mandate in late 2016 because it was viewed as a gateway to other deals expected to emerge from Saudi Arabia's privatisation plan.

"International banks feel that they have no choice...they will again send senior teams to Saudi Arabia to pitch, work and hopefully execute the deal," one of the sources said.

Evercore has pushed to win advisory roles in the Middle East, opening an office in Dubai in 2017 and advising Saudi Arabia's Sovereign Wealth Fund, the Public Investment Fund (PIF), on acquiring an equity interest in AccorInvest, a subsidiary of AccorHotels for US$4.94 billion in 2018.

It also advised the PIF on its US$1 billion investment in electric car maker Lucid Motors, according to sources.

Aramco's IPO is the centrepiece of a Saudi Arabian government plan to transform the economy by attracting foreign investment and diversifying away from oil.

Its gestation has however been complicated by scepticism about Crown Prince Mohammed bin Salman's public declaration in 2016 that the sale would value the company at US$2 trillion. There are also concerns about the legal risks and tough disclosure requirements associated with a foreign listing.

REUTERS