Last week, everything was going great. Bankers from some of the world's most prestigious banks (Bank of America, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, Lazard, Moelis & Co.) were convening at the Ritz Carlton Hotel in Dubai for what promised to be the first leg of the IPO of the moment. Saudi Arabian oil giant Aramco, valued at $2 trillion, was preparing a multi-stage listing - firstly on the local Riyadh exchange and then internationally. If you weren't in town - like Evercore, UBS or Barclays - you were missing out.
After the weekend drone attacks on Hijra Khurais and Abqaiq, one of Saudi Arabia’s largest oil fields and the world’s biggest crude stabilization facility, both owned by Aramco, the bankers in the Ritz Carlton can be forgiven for spluttering into the $27 trappist beers they've reportedly been drinking in Dubai. 2019's big deal, which already carried adverse reputational risks, suddenly also looks a lot harder to pull off.
Following the attacks, the Financial Times says Saudi Arabia and hence Aramco face "weeks" without production at full capacity; initial estimates suggested that more than 50% of daily production capacity has been taken out. While the shortfall can be made up from inventories, investors who were already questioning the $2 trillion Aramco valuation might be inclined to ask a little harder.
For the bankers who were riding on a crest of excitement last week, this causes a few problems. Before the weekend Aramco was said to be considering holding analyst presentations starting next week in preparation for a listing in November. That now looks ambitious: if the listing goes ahead, it may need a deep discount; if it doesn't it will need to be postponed in the hope that Aramco isn't subject to further attacks and that investors can be convinced of the company's resilience. Bankers at JPMorgan and Morgan Stanley - Aramco's lead advisors - are likely to be busy in the coming days as they help devise a new plan; the rest might as well go home for a bit or spend some time in the pool.
If the IPO is delayed, this wouldn't be the first time: it was also paused last year as Aramco company focused on buying a big chemicals producer instead. In any case, Saudi Arabia was never planning to list the company in its $2 trillion entirety - the coming IPO was only about testing the water with a 1% stake on the local exchange with another 1% to be listed internationally in 2020. Aramco CEO Amin Nasser said last week that the company was ready to list in various locations and that the timing was up to the Saudi government. “We have met all the checkpoints,” said Nasser. Unfortunately that's no longer the case.
Separately, if you're a first year Goldman Sachs analyst exhausted by the long hours, spare a thought for Cactus Razi, the former star bond salesman at Goldman Sachs. In an interview with Bloomberg, Razi - who left Goldman after failing to make partner and is now running Elefant (a company that has, "replaced traders with algorithms and replaced salespeople with APIs") - explains how when he started working with Goldman he needed an extra job to make ends meet.
Razi, who had a child while he was at university, worked as a doorman at 'Torch' on the Lower East Side as a first year analyst, says Bloomberg. He also travelled from New York to California twice a month to see his son. Suddenly having a child when you're a VP looks eminently feasible.
“This is the mother lode for an attack on Saudi infrastructure. We have always been concerned about an attack on Abqaiq.” (New York Times)
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Global warming means that submarine data cables have become easier to lay in previously frozen regions, which is good news for high-frequency traders. (Bloomberg)
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Wolf of Wall Street Jordan Belfort saw through Jho Low, the man in the middle of the 1MDB scam embroiling Goldman Sachs, before everyone else. This is a f****** scam — anybody who does this has stolen money…You wouldn’t spend money you worked for like that.” (The Times)
A travel agent achieved 42 million Delta SkyBonus points, valued at more than $1.75 million. (New York Times)
An ad man who lost his job in New Zealand chose a professional clown to attend his redundancy meeting. While the man was informed about his redundancy the clown made balloon animals and mimed crying. (NZ Herald)
An academic study has shown that it’s virtually impossible to be a day trader for a living. 97% of people lose money; only 0.4% earn more than $54 a day. (Academic paper)
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