Quid pro IPO

20 April 2017 By Pete Sweeney Follow @petesweeneypro

A Chinese consortium is angling for a cornerstone role in Saudi Aramco’s IPO, Reuters says. This bolsters the case for a Hong Kong listing. Riyadh will like the prospect of easy money with few strings attached. Japan, also competing for the deal, may need to step up.

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China is creating a consortium of state-owned oil giants, banks and its sovereign wealth fund, that will act as a cornerstone investor in the planned initial public offering of national energy giant Saudi Arabian Oil Co, popularly known as Aramco, Reuters reported on April 19, citing sources.

Aramco plans to list next year with a potential $100 billion equity sale, expected to be the world's largest to date.

Half a dozen sources with knowledge of the discussions told Reuters that China Investment Corporation (CIC), the country's $800 billion sovereign wealth fund, oil majors Sinopec and PetroChina, and the country's state-run banks were among the state-backed entities set to participate in the Chinese investment consortium.

Reuters reported in February that Industrial and Commercial Bank of China International Holdings, a unit of Industrial and Commercial Bank of China, and China International Capital Corporation (CICC) were among the Chinese banks pitching for a role in the IPO.

Aramco's board will meet in China in May for the first time in seven years, industry sources told Reuters, as the state-owned energy firm seeks to lure Chinese and Asian investors.

The governments of Japan and Saudi Arabia said in a joint statement in March that Aramco and the Tokyo Stock Exchange were considering setting up a joint group to study a Japan listing for the Saudi oil giant.

Research by Nicolle Liu

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