Later, however, Dubai - the financial center of the Middle East - received a lot of calls from bankers in London and New York.
Investment banks around the world wanted like to join those who will participate in this placement. Apparently, the new opportunity promised to become a new gold rush.
Saudi Aramco was pre-estimated at $ 2 trillion. Yet, the kingdom is planning to sell many state-owned assets to reduce its dependence on oil and to strengthen the finances. The bonds are expected to bring $ 15 billion.
Saudi Arabia looks increasingly promising for development of investment banking services, given the global recession and the results of the UK referendum.
Market participants say that Saudi Arabia is one of hot-topics in banks’ couloirs.
During the first five months of this year, the banking fees in the Kingdom rose by about a third to $ 100 million, according to the Freeman & Co. This is only part of what banks receive in the US and Europe, but work on diversification has only just begun.
In pursuit to gain a maximum advantage, international banks are actively increasing staff in Riyadh, including top management. At that, HSBC Holdings Plc and JPMorgan Chase & Co. seem to be the race’s leaders.
HSBC is supporting privatization of the Saudi Arabian stock exchange and potential separation of Saudi Electricity Co. In addition, Stuart Gulliver, the executive director of the London-based bank, is regularly seeing the kingdom’s decision makers.
As a result, two HSBC bankers have recently received jobs in the government. CEO for the Middle East, Mohammad Al Tuwaijri, was appointed deputy minister of economy and planning, and Fahad Al-Saif stood at the head of the debt management department, which will be responsible for the first international placement of the kingdom’s bonds.
HSBC and of JPMorgan, along with Citigroup, have been selected to organize this placement a few days ago.
JPMorgan acts as investment adviser on Uber for Saudi Public Investment Fund. The investments are estimated at $ 3.5 billion. Since the beginning of the year, the largest US bank increased its staff in the kingdom by 10%.
Deutsche Bank and Morgan Stanley also see a great potential in strengthening the market presence.
Major banks compete not only with each other, but with smaller firms as well. For example, Verus Partners Ltd., an advisory boutique created by former Citigroup bankers in London, helped the Government of Saudi Arabia to draw first loans in the amount of $ 10 billion for 15 years.
A company of another Citigroup’s former investment banker, Michael Klein, provides strategic advice to the government on Aramco’s upcoming IPO.
Deputy Crown Prince Mohammed bin Salman intends to create the world's largest sovereign wealth fund, as well as to twice increase proportion of foreign investment. This would be a real treat for investment banks.
By now, no one in the Middle East, and perhaps even in emerging markets, have not initiated such deep reforms.
Banks will get at least $ 50 million commission fees for Aramco’s IPO only. In this light, it’s not surprising that bankers are trying to do everything possible to gain access to placing, sale of assets, fund raising and investments. At the same time, they earn on transactions in Saudi Arabia less compared to other regions.
During IPO of National Commercial Bank, bankers, lawyers and accountants shared approximately $ 6.65 million, i.e. only 0.1% of the transaction. The comparable figure in Europe, the Middle East and Africa is 2.7%. Nevertheless, the opportunities for investment banks are too attractive, so they cannot give them up.
source: investors.com
Investment banks around the world wanted like to join those who will participate in this placement. Apparently, the new opportunity promised to become a new gold rush.
Saudi Aramco was pre-estimated at $ 2 trillion. Yet, the kingdom is planning to sell many state-owned assets to reduce its dependence on oil and to strengthen the finances. The bonds are expected to bring $ 15 billion.
Saudi Arabia looks increasingly promising for development of investment banking services, given the global recession and the results of the UK referendum.
Market participants say that Saudi Arabia is one of hot-topics in banks’ couloirs.
During the first five months of this year, the banking fees in the Kingdom rose by about a third to $ 100 million, according to the Freeman & Co. This is only part of what banks receive in the US and Europe, but work on diversification has only just begun.
In pursuit to gain a maximum advantage, international banks are actively increasing staff in Riyadh, including top management. At that, HSBC Holdings Plc and JPMorgan Chase & Co. seem to be the race’s leaders.
HSBC is supporting privatization of the Saudi Arabian stock exchange and potential separation of Saudi Electricity Co. In addition, Stuart Gulliver, the executive director of the London-based bank, is regularly seeing the kingdom’s decision makers.
As a result, two HSBC bankers have recently received jobs in the government. CEO for the Middle East, Mohammad Al Tuwaijri, was appointed deputy minister of economy and planning, and Fahad Al-Saif stood at the head of the debt management department, which will be responsible for the first international placement of the kingdom’s bonds.
HSBC and of JPMorgan, along with Citigroup, have been selected to organize this placement a few days ago.
JPMorgan acts as investment adviser on Uber for Saudi Public Investment Fund. The investments are estimated at $ 3.5 billion. Since the beginning of the year, the largest US bank increased its staff in the kingdom by 10%.
Deutsche Bank and Morgan Stanley also see a great potential in strengthening the market presence.
Major banks compete not only with each other, but with smaller firms as well. For example, Verus Partners Ltd., an advisory boutique created by former Citigroup bankers in London, helped the Government of Saudi Arabia to draw first loans in the amount of $ 10 billion for 15 years.
A company of another Citigroup’s former investment banker, Michael Klein, provides strategic advice to the government on Aramco’s upcoming IPO.
Deputy Crown Prince Mohammed bin Salman intends to create the world's largest sovereign wealth fund, as well as to twice increase proportion of foreign investment. This would be a real treat for investment banks.
By now, no one in the Middle East, and perhaps even in emerging markets, have not initiated such deep reforms.
Banks will get at least $ 50 million commission fees for Aramco’s IPO only. In this light, it’s not surprising that bankers are trying to do everything possible to gain access to placing, sale of assets, fund raising and investments. At the same time, they earn on transactions in Saudi Arabia less compared to other regions.
During IPO of National Commercial Bank, bankers, lawyers and accountants shared approximately $ 6.65 million, i.e. only 0.1% of the transaction. The comparable figure in Europe, the Middle East and Africa is 2.7%. Nevertheless, the opportunities for investment banks are too attractive, so they cannot give them up.
source: investors.com
