Lazard’s Success on Aramco Bond Puts It in Pole Position for Coveted IPO

(Bloomberg) -- Lazard Ltd.’s success working on the blockbuster Saudi Aramco bond sale this year has put it in pole position to secure a coveted spot on the oil giant’s second attempt at the world’s largest initial public offering.

Several rival bankers seeking a role on the IPO expect Lazard to get an advisory mandate, thanks to its work on the debut bond sale by Aramco that attracted more than $100 billion of orders, people with knowledge of the matter said.

The boutique advisory firm has been pushing hard in recent weeks to win a role on the planned share sale, sending some of its top global dealmakers from London, Paris and Houston to woo Aramco officials at meetings in the Middle East, the people said. Lazard, run by Ken Jacobs, is likely to replace one of the original advisers that previously worked on the listing plans, the people said, asking not to be identified because the information is private.

Lazard’s shares rose as much as 4.1% in New York trading.

The oil producer was originally working with Evercore Inc. and Moelis & Co., as well as HSBC Holdings Plc, JPMorgan Chase & Co. and Morgan Stanley.

$12 Billion Success

Aramco is planning a stock-market listing as early as in 2020 and is expected to favor advisers that have an existing relationship with the firm, according to the people. The success of the debt issuance, which allowed Aramco to borrow $12 billion at a lower yield than its sovereign parent, came at a time when Saudi Arabia was still facing international criticism over the assassination of journalist Jamal Khashoggi.

Winning a role on the potential IPO would be a significant victory for Lazard’s efforts to bolster its Middle Eastern business. Unlike rivals such as Evercore and Moelis, Lazard has a limited on-the-ground presence in the region and covers the Gulf primarily from its offices in Europe.

A successful IPO would generate hefty fees for the banks lucky enough to get on the deal. Moelis saw its shares surge in early 2017 when reports of its advisory role with the oil giant became public.

Bank Pitches

Aramco has recently asked Saudi and international investment banks to pitch for a role on the offering, according to the people. Local banks have told to register their interest in the next week, with formal pitches expected to take place as soon as this month, the people said.

The oil giant has been holding talks with a select group of investment banks as it restarts preparations for the IPO, Bloomberg News reported last month. No final decisions have been made, and Aramco’s plans could still change or be delayed, the people said.

Aramco, officially known as Saudi Arabian Oil Co., declined to comment. A representative for Lazard didn’t respond to requests for comment.

The IPO project was first announced in 2016 as the cornerstone of the kingdom’s Vision 2030 plan to modernize the Saudi economy, with a target of listing in the second half of 2018. Aramco formally put the IPO plans on hold last year and instead decided to buy a $69 billion stake in local chemical giant Saudi Basic Industries Corp.

--With assistance from Michael Hytha.

To contact the reporters on this story: Dinesh Nair in London at dnair5@bloomberg.net;Matthew Martin in Dubai at mmartin128@bloomberg.net;Myriam Balezou in London at mbalezou@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Amy Thomson, Ben Scent

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