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JPMorgan, HSBC competing for $4B Saudi IPO

JPMorgan Chase & Co. and HSBC Holdings Plc. are among banks planning to compete for a role in the largest Saudi Arabian share sale in at least 12 years, according to five people with knowledge of the matter.

The banks will vie with local lenders including Banque Saudi Fransi and Gulf International Bank to be appointed as financial adviser on the sale of a 15 percent stake in Jeddah-based National Commercial Bank, the people said, asking not to be named as the information isn’t public. NCB, as the lender is known, sent out a request for proposals to banks to manage the initial public offering earlier this week, the people said.

The first Saudi bank IPO since 2008 could raise about 16 billion riyals ($4.3 billion) based on NCB’s profits and trading values of other Saudi banks, according to Asim Bukhtiar, head of research at Riyad Capital, the investment-banking unit of Riyad bank. That would surpass the 15 billion riyal offering by Saudi Telecom Co. in 2002, according to data compiled by Bloomberg.

Saudi Arabia’s Public Investment Fund is selling part of its 69 percent holding in NCB, bank Chairman Mansoor al-Maiman said Feb. 27.

A request for proposals “was sent to a selected number of authorized persons to act as the financial adviser for the IPO process as per CMA requirements,” NCB said in an emailed statement Wednesday, referring to the Saudi financial market regulator. “Once the selection is made, the selected financial adviser will be announced.”

NCB is the second-largest bank in the Middle East by assets and the largest in the kingdom, according to data compiled by Bloomberg. The bank had total assets of $101 billion at end of last year, compared with Qatar National Bank’s $122 billion. Profit last year rose 22 percent to 7.9 billion riyals.

Saudi Arabia’s stock market is the Gulf’s largest, with a market value of about $506 billion. Foreign investors cannot trade directly on the exchange, instead they have to invest through swaps or funds.

NCB is one of several companies planning IPOs to take advantage of the surging Tadawul All Share Index, which has gained 9 percent this year. ACWA Power International, a Saudi Arabian energy producer, earlier this month hired Saudi Fransi Capital to advise on a sale that could raise as much as $1.1 billion, according to two people familiar with the matter. Samba Financial Group in February said it was appointed financial adviser for an offering of shares in the cargo arm of Saudi Arabian Airlines.

JPMorgan was adviser and sole underwriter on the $2.5 billion IPO of Saudi Arabian Mining Co. in 2008. The U.S. bank, along with HSBC, Gulf International Bank and NCB’s own investment banking arm, last month arranged a 5 billion riyal Islamic bond for NCB. The sukuk was priced at 110 basis points above the six-month Saudi interbank offered rate.

A spokeswoman for JPMorgan declined to comment, as did spokesmen at HSBC and Saudi Fransi. A spokeswoman for GIB didn’t respond to calls seeking comment.

 
A version of this article appeared in the print edition of The Daily Star on March 21, 2014, on page 5.

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Summary

JPMorgan Chase & Co. and HSBC Holdings Plc. are among banks planning to compete for a role in the largest Saudi Arabian share sale in at least 12 years, according to five people with knowledge of the matter.

The first Saudi bank IPO since 2008 could raise about 16 billion riyals ($4.3 billion) based on NCB's profits and trading values of other Saudi banks, according to Asim Bukhtiar, head of research at Riyad Capital, the investment-banking unit of Riyad bank.

The U.S. bank, along with HSBC, Gulf International Bank and NCB's own investment banking arm, last month arranged a 5 billion riyal Islamic bond for NCB.


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