Low demand for shares of Saudi Aramco has consequences for Switzerland’s Credit Suisse – the bank is no longer in the co-lead of the initial public offering.
A big IPO needs many banks to coordinate the deal – that’s what Saudi Prince Mohammed bin Salman thought when he launched the sale of shares in state-owned oil producer Saudi Aramco. He expected to make as much as $2 trillion for his kingdom.
Saudi Arabia chose nine investment banks to handle the deal as global coordinators, among them Credit Suisse. It has since turned out that the IPO won’t be quite as huge as intended. As global investors showed little enthusiasm for the big price tag attached to the shares, the Saudi firm no longer needed the global coordinators.
Local Demand
Instead, HSBC, as well as local banks NCB Capital and Samba Capital, will handle the demand from investors said the «Financial Times» (behind paywall) in a report. Credit Suisse and other major investment banks such as J.P. Morgan and Morgan Stanley have been sidelined in the process.
Thanks to its Saudi banking license, Credit Suisse will however still be able to distribute Saudi Aramco shares. The company will sell a total of 1.5 percent of its shares, primarily to investors in Saudi Arabia and the Middle East. The bank expects to generate $25 billion.
