Banks Are Hired By Saudi Aramco Refiner For A $1 Billion Share Sale

A refining arm of the state-owned oil company, Saudi Aramco Base Oil Co., has picked banks including Citigroup and HSBC Holdings Plc as underwriters for its initial public offering on the Saudi stock exchange. The IPO is expected to raise approximately one billion dollars. According to a statement, the business that is also known as Luberef has plans to sell 50 million shares, which would represent a stake of about 30 percent. After the book-building time has ended, the price at which all of the investors who have subscribed to the offering will purchase the shares will be decided.

SNB Capital was brought on board by the corporation to serve in a variety of managerial and advisory capacities, including book-runner, worldwide coordinator, and underwriter. In addition to that, it designated Citigroup Saudi Arabia, HSBC Saudi Arabia, and Morgan Stanley Saudi Arabia as the financial advisers, book-runners, global coordinators, and underwriters for the offering.

According to the prospectus provided by the corporation, the period for accepting bids from participating parties and beginning the book-building process would begin on December 4 and last for six days. Individual investors will be able to begin the subscription period on December 14 and continue for the following two days. The announcement of the final allocation of offer shares will take place no later than December 22.

Last Monday, the Saudi Arabian Capital Market Authority gave its blessing to Luberef’s initial public offering (IPO) proposal. Saudi Aramco owns seventy percent of the refinery industry, which has operations in the Saudi industrial cities of Jeddah and Yanbu. The remaining thirty percent is controlled by a local private equity group called Jadwa Investment. The transaction consists of Saudi Aramco maintaining its interest in Luberef while Jadwa sells its shares in the company to raise capital. According to a recent report in June, the offering may garner close to one billion dollars.

This year, the energy-rich Persian Gulf has been one of the world’s IPO hotspots, accounting for roughly half of the revenues from new share listings across Europe, the Middle East, and Africa. This makes the Persian Gulf one of the world’s hotspots for initial public offerings. The Middle Eastern markets have profited from strong oil prices, Saudi Arabia alone has witnessed a record 27 initial public offerings (IPOs) this year. This comes at a time when share sales elsewhere have dried up as a result of aggressive interest rate rises.

In 2007, Jadwa purchased its interest in Luberef from Exxon Mobil Corporation. 1978 was the year that Exxon made its first investment in the refinery. On the west coast of Saudi Arabia, Luberef maintains two production plants, one each in Yanbu and Jeddah. Asphalt, naphtha, and marine heavy fuel oil are just a few of the byproducts and base oils that are created by this process. The Middle East, North Africa, and India account for the vast majority of their sales. Additionally, it is sold in the continents of Asia, the Americas, and Europe.
According to a statement released by the company, there is an anticipated increase of around 5 million metric tons in the demand for base oils worldwide between the years 2022 and 2030. “The demand prognosis for base oils is further underpinned by strong macro fundamentals in Saudi Arabia and the broader Middle East area,” both of which are significant end-markets for Luberef. “The demand outlook for base oils is expected to increase somewhat in the coming year.”

According to the statement released by Luberef’s president and chief executive officer, Tareq Alnuaim, “Luberef will continue focusing on achieving growth in important end-markets, particularly where market dynamics give appealing demand outlooks.”

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