US bankers reap a pittance from Aramco $64 billion IPO

By: Thornton M.

Saudi Arabia’s state-owned oil company launched the biggest IPO in history this week — and American banks like JPMorgan are getting what amounts to pocket change.

Saudi Aramco raised more than $64 billion from its Wednesday mega-listing, which by Friday had resulted in a publicly traded behemoth valued at nearly $2 trillion on Saudi Arabia’s stock exchange.

But JPMorgan, Goldman Sachs, Citigroup, Credit Suisse, Bank of America and Morgan Stanley are getting paid roughly $3 million apiece for their roles in the deal, according to banking sources.

Those are the kind of fees that Wall Street banks usually earn from participating in a failure.

Boasting a relationship with the royal family that dates back to the founding of Saudi Arabia in the 1930s, JPMorgan reportedly spent the better part of three years advising Crown Prince Mohammed bin Salman on the IPO.

“Every bank wanted a slice of fees on this one, and it got out of hand,” said one energy analyst. “But JPMorgan definitely had the inside track at the start.”

But JPMorgan bankers were eventually forced to confront the Crown Prince, known as MBS, on a slew of issues, including perceived oil-price manipulation, the legal fallout from 9/11 and the murder of Jamal Khashoggi.

Such dustups made an Aramco listing on a non-Saudi-owned exchange virtually impossible. Ultimately, however, JPMorgan and its Wall Street counterparts saw their Aramco relationships unravel over MBS’ refusal to budge from his demand for a $2 trillion valuation, according to reports.

As late as this year, according to a Bloomberg report, senior JPMorgan bankers were urging senior Saudi officials to consider a substantially lower valuation that would attract more interest from concerned Western investors. That advice was met with angry shouting and ultimately ignored.

In the end, MBS used two domestic investments banks and HSBC to list Aramco stock on his own Tadawul exchange, marketing the shares almost exclusively to Saudi Arabians and citizens of neighboring Gulf states. That final decision obviated the work done by JPMorgan and the five American banks.

Leaving Wall Street out of a deal this size might have real repercussions for the Saudis, however. In multiple conversations with traders, fund managers and brokers, The Post has learned that US-based interest in Aramco stock is extremely low.

“I think Wall Street just feels lucky not to have subjected their clients to giving MBS money for his personal allowance,” said Stephen Klein, COO of Mistell Management.