JP Morgan sees more Saudi cos ‘looking’ for overseas flotation

ABU DHABI, Nov 7, (RTRS): JPMorgan is in early talks with Saudi Arabian companies about overseas listings, its investment bank chief said, raising the possibility that more firms could join oil giant Saudi Aramco in seeking an international flotation.

JPMorgan is among the banks advising Aramco on an international public offering (IPO), sources have told Reuters.

Aramco’s listing is part of economic reforms being pushed by Crown Prince Mohammed bin Salman, who wants to make the kingdom less reliant on oil and has been consolidating his power with sweeping arrests that officials say aim to end corruption.

“If you want these companies to grow, they must have access to international capital markets,” Daniel Pinto, chief executive of JPMorgan’s investment bank, told Reuters about the possibility of other Saudi international listings.

“Local companies have expressed interest to us. They are at a preliminary stage,” he said in an interview in Abu Dhabi.

This was the first time an influential banker has said Saudi firms other than Aramco could seek IPOs overseas.

The Saudi government plans to sell about 5 percent of Aramco next year, a move that Saudi officials say could raise about $100 billion, making it the world’s largest IPO.

Pinto declined to comment on the bank’s role in the Aramco deal or to name other firms considering international listings.

JPMorgan has deep ties with the government and firms Saudi Arabia, having worked in the kingdom for more than 80 years.

Pinto said the bank was also in talks with other Gulf companies to list their assets overseas.

He said listings in New York, London, Hong Kong or Singapore might help increase the liquidity of these companies and make them attractive for international investors, he said.

“When you have this type of momentum, people will see the benefit of having a stock that is very liquid. Other companies in the region will probably follow,” Pinto said.

Oman said earlier this year it planned to offer shares in some stateowned downstream energy companies to the public. Analysts and bankers have said Qatar and Kuwait may also consider plans to list energy assets.

JPMorgan was considering raising its headcount by 30 percent in Saudi Arabia over the next two to three years from 70 now, as business opportunities expand, Pinto said.

Saudi Arabia unveiled its Vision 2030 economic plan last year to diversify the economy away from oil, with proposals to float the Aramco stake and sell other state assets.

“Saudi Arabia is going through a massive transformation as they diversify their economy,” Pinto said. “Over the past year, investors have reacted positively to this news.”

The bank’s revenue from Saudi Arabia and the rest of the region is expected to be boosted by another record year of bond sales as lower oil prices curbed the ability of banks to finance investments and fund state budget deficits.

Dollar-denominated bond issuance from the Gulf has totalled about $80 billion so far this year, higher than the record $63.5 billion in the whole of 2016, Thomson Reuters data shows.

“The need to issue will still exist but be smaller next year because of higher oil prices and lower deficits and simply because so much refinancing was done this year,” Pinto said.

As part of its reform drive, the Saudi government has launched an campaign of arrests of royals, ministers and businessmen, saying it is seeking to stamp out corruption. Those detained include leading Saudi investor Prince Alwaleed bin Talal, whose investment vehicle has a stake in Citigroup.

Commenting on the anti-corruption drive, Pinto said: “If it is done in the right way and for the right reasons it is good to do for the future of the kingdom.” A picture taken on Oct 31, 2017 shows an advertising banner in Cairo for ‘WE’ a new mobile service from Egypt’s state-owned company Telecom Egypt. In a country with more mobile phone subscriptions than residents, Egypt’s

only fixed-line operator is hoping to get in on the action with its new mobile service, WE. (AFP) SINGAPORE, Nov 7, (RTRS): Qatar Airways wants to create a virtual mega-carrier that will benefit from economies of scale in negotiations on fuel and aircraft purchases while it boosts investment in other airlines, its chief executive said on Tuesday.

The Qatari carrier announced a $661 million deal on Monday to buy a 9.61 percent stake in Hong Kong’s Cathay Pacific Airways to broaden its reach and potentially allow the oneworld alliance member to increase traffic through its Doha hub.

“Frankly, I wish I could buy more. But the Swire Group and Air China hold most of it and I’m the third-largest shareholder, which is not bad,” Qatar Airways Chief Executive Akbar Al Baker said at the CAPA Asia Summit in Singapore, referring to Cathay’s biggest stakeholders. Qatar Airways has been unable to fly to the previously lucrative markets of the United Arab Emirates and Saudi Arabia because of an airspace rights dispute, prompting investment elsewhere.

Al Baker said the airline expects to report a loss in the financial year to March 31, 2018, as a result of the blockade.

The airline has acquired 20 percent of British Airways parent International Consolidated Airlines Group, 10 percent of South America’s LATAM Airlines Group and 49 percent of Italy’s Meridiana.

Al Baker said that Qatar Airways wants shareholdings to be exchanged between itself and its portfolio airlines as it seeks to become a virtual megacarrier.