Investing guru Mohamed El-Erian said he would buy Saudi Aramco shares without a doubt if the state oil giant’s historic initial public offering (IPO) had listed internationally.
Aramco’s long-awaited listing on the Saudi Arabian stock exchange is due on Wednesday, completing the largest IPO on record and raising $25.6 billion from retail and institutional buyers who took on debt to back their orders.
CNBC reported that when asked during a panel event at Abu Dhabi’s SALT conference on Monday if he would buy shares of the world’s most profitable company, the chief economic adviser at Allianz and Newsmax Finance Insider gave an enthusiastic “Yes,” adding that it could list on “any market, it doesn’t matter.”
El-Erian, who was tapped by Aramco as an informal adviser in early 2018, added that “It wouldn’t matter at what price,” saying that he’d buy shares “at the IPO price.”
Meanwhile, Saudi Arabia’s central bank is ready for any liquidity squeeze from Saudi Aramco’s IPO and is closely monitoring local banks, its governor said, after heavy demand for loans to buy the stock.
“We don’t rule out that there might be squeeze of liquidity later on, that’s why I am ready and stand ready to intervene,” Ahmed al-Kholifey told Reuters.
Saudis had clamored to own part of the “crown jewel” of the world’s top oil exporter in the lead up to its IPO, with Aramco’s institutional tranche 6.2 times oversubscribed, while more than 5 million individuals subscribed to a retail tranche.
The Aramco IPO is the centerpiece of the Saudi crown prince’s plans to diversify the economy away from a reliance on oil, as the money will be reinvested by the Saudi Public Investment Fund (PIF) to promote growth in other sectors.
Saudi banks extended huge loans for clients wanting to maximize their participation in the IPO, with some expanding lending to four times the official limit, sources have previously told Reuters.
During the IPO process, the loan-to-deposit ratio (LDR) at some banks had exceeded a 90% “soft guideline” set by the regulator, but the ratio improved after the allocation process ended, Kholifey said in an interview.
“So far no bank has come to ask for liquidity from the central bank. We are ready to intervene in case there is a squeeze of liquidity but most of the indicators right now are not worrying,” Kholifey added.
The central bank has set up a team specifically to closely monitor all indicators in the banking system during the IPO process, and it held meetings on a daily basis.
“I don’t think in the near future they will settle, we have to keep monitoring the situation until we see things are normal, especially the LDR,” he said.
Saudi corporates snapped up the biggest percentage of allocations to the Aramco IPO at 37.5% and Saudi government institutions were allocated 13.2% of the institutional tranche, the latest figures issued by the deal’s lead bank showed.
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