Sep 9, 2019

J.P. Morgan takes the lead as top adviser for Saudi Aramco IPO

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Data: Investing.com; Chart: Axios Visuals

J.P. Morgan Chase is close to winning the lead advisory role for state-owned oil company Saudi Aramco's IPO, which is expected to be the largest ever at $25 billion. A final decision is expected next week, CNBC reports, citing inside sources.

What's happening: Saudi authorities reportedly plan to sell 5% of Aramco’s shares on the local Tadawul stock exchange and launch another, much larger, offering in a foreign market in the next 2 years.

  • Rumors have swirled about which location will get the much larger listing, with Tokyo most recently reported as the favored destination.
  • The exchange's CEO promised last year shares of Aramco listed on the Tadawul would be limited so as not to overwhelm the $500 billion bourse with Aramco's $2 trillion market value.

Of note: The Tadawul was recently incorporated into MSCI's emerging markets index, which has brought billions of dollars to the exchange so far this year.

  • From the start of 2019 through the end of July, foreign investors have accounted for 21% of total trading, reaching $56 billion, according to an August exchange filing.
  • The Saudi index had risen nearly 20% at its peak in May, Reuters reported.
  • However, the index has seen a steep slide since, due to geopolitical worries and the trade war, and is up 2.5% year-to-date.

Go deeper: Saudi Arabia's oil minister is out in a major shake-up

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Saudi oil sites hit by drone strikes: U.S. blames Iran

Smoke billowing from an Aramco oil facility following the Houthi attacks. Photo: AFP/Getty Images

Iran denied Sunday U.S. accusations that it was behind drone attacks targeting the world's largest oil processing facility at Abqaiq and a major oil field at Khurais in Saudi Arabia the previous day.

The latest: Yemen's Iranian-backed Houthi rebels claimed responsibility for the early Saturday strikes, AP reports. But U.S. Secretary of State Mike Pompeo blamed Iran, saying "there is no evidence the attacks came from Yemen." Iranian Foreign Ministry spokesperson Abbas Mousavi said in a statement the U.S. accusations were "blind, incomprehensible and meaningless."

Go deeperArrowUpdated Sep 15, 2019

Beware investing in autocracies

Illustration: Sarah Grillo/Axios

Aramco, Saudi Arabia's state-owned oil company, promised this week that it would set a dividend of at least $75 billion through 2024 — or, that non-government shareholders would receive at least $750 million in dividends for every 1% of the company that they own, from 2020 through 2024.

Why it matters: Because the Saudi royal family controls Aramco, it doesn't need the company to pay any dividends at all. If they need to extract money from Aramco, they can always raise the company's tax rate, or simply expropriate what they need.

Go deeperArrowOct 3, 2019

Saudi Aramco revs up IPO sales pitch

An Aramco oil refinery in Saudi Arabia in 1990. Photo: Tom Stoddart/Hulton Archive/Getty Images

Saudi Arabia's efforts to boost interest in the IPO of state oil giant Aramco are moving into higher gear.

Driving the news: The company posted a new "corporate overview" yesterday that pledges a $75 billion dividend in 2020 and for several years ahead.

Go deeperArrowOct 1, 2019