Aramco picks advisers for bumper IPO

London, Dubai (Bloomberg): Saudi Aramco has picked Lazard Ltd. and Moelis & Co. to advise on the oil giant’s second attempt at the world’s largest initial public offering. The investment banks have started preparatory work on the offering, according to people who asked not to be identified.

The selection is a boon particularly for Lazard, which wasn’t one of the advisers on Aramco’s first listing attempt. The oil producer was originally working with Evercore Inc. and Moelis, as well as HSBC Holdings Plc, JPMorgan Chase & Co. and Morgan Stanley. Lazard’s success working on the blockbuster Aramco bond sale this year put it in pole position to secure a role on the IPO.

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 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. Lazard is likely to replace one of the original advisers that previously worked on the listing plans.

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

Past relationships matter

Aramco is planning a stock market listing as early as in 2020 and is expected to favour advisers that have an existing relationship with the firm. The debt issuance allowed Aramco to borrow $12 billion at a lower yield than its sovereign parent.

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 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.

Calling in pitches

Aramco recently asked Saudi and international investment banks to pitch for a role on the offering. 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. No final decisions have been made, and Aramco’s plans could still change or be delayed, the people said.