(Bloomberg) — Saudi Arabia sidelined global banks advising on Aramco’s initial public offering after the deal was pared back to a mainly domestic affair. JPMorgan Chase & Co. and Morgan Stanley are among global coordinators that have been marginalized as the oil giant turns to local lenders Samba Financial Group and National Commercial Bank, as well as HSBC Holdings Plc to handle investor orders, according to people with knowledge of the matter.
Bank of America Corp., Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. — also global coordinators — have been told to submit their orders through the three banks, the people said, asking not to be identified because the matter is private. The international banks won’t have access to the IPO orderbook without Aramco’s permission, they said.
Aramco declined to comment. HSBC, JPMorgan, Credit Suisse and Morgan Stanley declined to comment. The other banks didn’t immediately respond to requests for comment. More than 20 global investment banks are working on Aramco’s IPO after it was finally given the green light following repeated delays. Senior bankers delivered pitches that Aramco would be able to achieve Crown Prince Mohammed bin Salman’s $2 trillion target. Saudi officials are now frustrated Wall Street’s biggest names were unable to deliver on those promises.
The banks are also set to miss out on an expected fee bonanza after foreign investors snubbed the deal and Aramco decided not to market the share sale outside the Middle East, Bloomberg News has reported.
The offering will now rely mainly on local investors after most international money managers balked at even the reduced price target of $1.6 trillion to $1.71 trillion.
Aramco was expected to pay the more than two dozen advisers on the deal, including banks, lawyers, marketing and advertising agencies, between $350 million to $450 million, Bloomberg News reported in October. But the final payments will depend on how much equity banks are able to place with investors, the people said.
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