Saudi Aramco, the largest oil group in Saudi Arabia is planning to make history. According to a survey led by French Les Echos, the giant would prepare a fundraising record estimated at more than $10 billion.
This will be the first debt-raising on the financial markets for Saudi Aramco. While the experts predict an almost immediate success, the long-term strategy of the group attracted investors.
With meetings inviting the biggest investors to his table, Saudi Aramco has signed the biggest funds of Tokyo, Los Angeles, Singapore, Chicago and New York. A real financial marathon that started on April 1st and ended on April 5th.
A seduction operation just after the murdered journalist Khashoggi’s case? Analysis behind the scenes of a historical transaction.
An international marathon
In the financial industry, investor marathons are called “roadshows”. The one Saudi Aramco gave last week was just like the operation: historical.
In four days, the company’s managers traveled around the world – from Asia to the United States via Europe. Their goal: to meet with investors and convince them as quickly as possible to bring in some cash in.
Saudi Aramco’s debut international bond issue have maturities ranging from three to 30 years https://t.co/nesAGvN47b
— Arab News (@arabnews) April 11, 2019
For this occasion, the CEO of Saudi Aramco, Amin Nasser, travelled himself to meet with the most VIP potential investors, in order to make the deal possible – but also, to insure a monumental PR stunt.
Although the Saudi company has been quick to speed up the process, it had to comply with many financial regulations, especially coming from Europe and America.
A pro-transparency policy
In order to convince investors from different cultures, the Aramco Saudi leaders decided to go full-on transparency; a first for a company where secrecy was the legion.
The Saudi company has published a 500-page brochure for regulators, rating agencies and qualified market players”. A first for the kingdom, since the majority of this information remained confidential, since it was established. As a matter of fact, the company has been nationalized for more than 40 years, but this is the first time that Aramco has unveiled its annual financial results.
— Tom Quinn (@WMTomQuinn) April 11, 2019
This documentation then served as a schedule for appointments with more than 100 investors from around the world last week. For investors, there is no a doubt: Aramco is ready to follow the current international rules of finance.
Many investors praised Aramco’s transparency initiative as experts recognize the immense effort that the company has provided.
A global partnership strategy
Cherry on the cake: Aramco surrounded itself with the best auditing agencies in the Western world. It includes PricewaterhouseCoopers, but also the two flagship agencies, Fitch and Moody’s for its credit rating. This, report experts, only added up some credibility to seal the deal.
An impressive press campaign, ranging from interviews on local TV stations to a dedicated interview for Reuters, helped the group asserting its reputation.
Last but not least, the former right-hand man of businessman Bill Gross, Mohamed El-Erian, was behind of the Aramco project for more than two years. El-Erian is known in the financial world for his close ties with the Crown Prince, Mohammed Ben Salmane, aka MBS.
Many key finance groups have joined the project, such as JPMorgan, Morgan Stanley, Citi, Goldman Sachs and HSBC. This only confirmed the credibility of the project by appealing to institutions recognized by a Western and Asian clientele.
On Tuesday, April 9, 2019, the Saudi company issued a press release announcing a loan raise estimated at $12 billion. Aramco’s 2018 profits, estimated at $ 111 billion, are three times more important than Apple, the world’s largest technology company.
Take The Next Step with Alvexo Leave your details and we’ll reach out shortly.