Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. have secured roles on what’s set to be Saudi Arabia’s largest-ever M&A deal.
It’s perhaps some consolation for losing the chance to work on the world’s biggest share sale.
Citigroup is working with Saudi Basic Industries Corp. as Saudi Aramco seeks to buy a majority stake in the petrochemical giant from the Public Investment Fund, according to people with knowledge of the matter. Goldman Sachs and Bank of America are advising the sovereign wealth fund on the deal, two separate people said, asking not to be identified because the talks are private.
The deal would give the PIF, as the sovereign fund is known, the financial firepower it needs to carry out ambitious investment plans at home and abroad as Aramco’s own initial public offering stalls. Aramco was set to appoint Goldman and Citigroup among other lenders to help manage its IPO before the plans were put on hold, people familiar with the matter said in January.
JPMorgan Chase & Co. and Morgan Stanley are advising state-owned Aramco on the acquisition, according to people familiar with the matter. At current market prices, the PIF’s stake in Sabic is worth about $70 billion. At that valuation, the deal will potentially be the second biggest M&A transaction this year, short of Takeda Pharma’s $80 billion acquisition of Shire Plc, according to data compiled by Bloomberg.
The importance of the Aramco IPO seems to have waned as Crown Prince Mohammed bin Salman grapples with an agenda crowded with social and economic reforms at home and an assertive foreign policy. Executives at the PIF and Sabic didn’t immediately respond to requests for comment. Citigroup, Goldman Sachs and Bank of America declined to comment.
The PIF plans to become the world’s biggest sovereign fund, controlling more than $2 trillion by 2030. The fund is a central part of the government’s effort to diversify the economy away from oil, under a plan known as Vision 2030. The fund has also been working with former Citigroup rainmaker Michael Klein on its investment strategy and funding plans, people familiar with the matter have said previously.
Aramco is weighing tapping the international bond market for the first time to finance the Sabic acquisition in what could be among the biggest-ever bond sold by a corporate issuer, people familiar with the talks said in July. Aramco said it may buy shares in Sabic in a private transaction.
Citigroup and Goldman were said set to be joined by JPMorgan, Morgan Stanley and HSBC Holdings Plc as global coordinators on the Aramco IPO. Moelis & Co. and Evercore were said to be independent advisers.