Aramco Hiring Banks for Bond Sale Ahead of IPO

Saudi Arabian Oil Co., the world’s largest oil producer, picked four banks to advise on its first bond sale, two people familiar with the matter said, ahead of 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, Bloomberg reported.

NCB Capital Co. and Alinma Investment Co. are also working on the deal that could be followed by the sale of 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 is selling bonds as it prepares for a share sale in 2018 and follows the Saudi Arabian government’s debut offering in October which 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.

Saudi Arabia plans to sell less than 5% 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. 

The company asked banks including Goldman Sachs Group Inc. and HSBC last month to pitch for an advisory role on the IPO, people said at the time.

Aramco’s estimated IPO size of $100 billion would make it the largest ever, dwarfing the $25 billion raised by Chinese Internet retailer Alibaba Group Holding Ltd. in 2014.

In related news, sources said Singapore is considering a range of measures to lure a listing from Aramco.

The island nation is reportedly studying proposals including inviting one of its state investment companies to become a cornerstone investor in Aramco’s IPO, as well as potential Singapore cooperation with the Saudi government on future investments, the sources said.