Editors' pick: Originally published March 30.
Saudi Arabian Oil Co., better known as Saudi Aramco, has lined up the banks that will lead what's expected to be the biggest initial public offering in history next year -- one of which has a direct tie to the oil behemoth and the Kingdom of Saudi Arabia.
JPMorgan Chase & Co (JPM) , Morgan Stanley (MS) , HSBC Holdings plc (HSBC) , Moelis & Company (MC) and Evercore Partners Inc (EVR) have been officially appointed as financial advisers, according to a Reuters report. Saudi Aramco recently added HSBC as a lead underwriter because of its strong ties to China. Last month, the company announced that JPMorgan and Morgan Stanley would also be lead underwriters on the IPO.
JPMorgan, which has a long commercial banking relationship with Saudi Aramco, counts the current chairman of the oil giant, Khalid bin Abdulaziz Al-Falih, as a member of the bank's international council, where he has served since 2010. In addition to his role at Saudi Aramco, Al-Falih, 57, is the energy minister for the Kingdom of Saudi Arabia Ministry of Petroleum and Mineral Resources.
The former chief executive of Saudi Aramco, Abdallah Saleh Jum'ah, 76, was on JPMorgan's international council until 2009. Jum'ah is also Chairman of Saudi Investment Bank and a committee member for Saudi Arabia's Supreme Economic Council.
Former Chevron Corp (CVX) CEO David O'Reilly had brief stints at both JPMorgan and Saudi Aramco. O'Reilly was a council member for the bank between 2009 and 2010. He then served as a director for Saudi Aramco between 2010 and 2011, according to BoardEx. BoardEx is a business unit of TheStreet.
JPMorgan's board also includes former ExxonMobil Corp (XOM) CEO Lee Raymond, who acts as as lead independent director, giving the bank an officer with oil and gas expertise at the highest levels.
JPMorgan will also be a key player on the execution side. The bank ranked first in Bloomberg's league table of global equity offerings in 2016 with $41.3 billion of deals. The Aramco IPO has been reported as being worth about $100 billion.
Moelis & Company can offer political expertise from board members Eric Cantor, former member of the U.S. House of Representatives, and John Allison, former CEO of the Cato Institute. Meanwhile, Evercore chairman Roger Altman worked at the U.S. Department of Treasury in the 1990s and directors Dick Beattie and Curt Hessler spent time at the U.S. Department of State.
Morgan Stanley has strength in Asia and especially in Japan thanks to its close relationship with Mitsubishi UFJ Financial Group Inc.
The Japanese bank's CEO, Nobuyuki Hirano, and Ryosuke Tamakoshi, a senior adviser of the bank, both sit on Morgan Stanley's board. Fellow directors Jami Misik, Co-CEO and Vice Chair of Kissinger Associates, Inc., Saudi businesswoman Huthan Olayan, and Alistair Darling, who has held several senior roles in the U.K. government, also could provide insight for the IPO.
HSBC's strengths, meanwhile, are its close ties to China and a board long on political expertise.
Current group chairman Douglas Flint serves as an ambassador to UK Trade and Investment, a government body that promotes trade and exports. HSBC Group CEO Stuart Gulliver is chairman of Hongkong and Shanghai Banking Corp Ltd as well as an advisory council member to China Banking Regulatory Commission, according to BoardEx.
HSBC independent director Kathleen Casey is a former commissioner of the U.S. Securities and Exchange Commission, acting as its principal representative in discussions with the G20 Financial Stability Board. Director Laura Cha has extensive regulatory and policymaking experience in the finance and securities sector in Hong Kong and mainland China. Board member Henri de Castries, former CEO of French insurance firm AXA, has more than 25 years of international experience in the finance industry. Director John Lipsky previously worked at the International Monetary Fund. Heidi Miller, director since 2014, was the former president of International at JPMorgan Chase & Co. Board member Jackson Tai previously worked at the Bank of China. Director David Nash was the former group finance director for Scottish Power plc, the global energy group. Neptune Oil & Gas Limited Chairman Sam Laidlaw also provides the board with expertise in the energy sector.
HSBC's ties to China are needed as Saudi Aramco is already looking to China to sell a chunk of an IPO that expected to be four times bigger than the current record holder, Alibaba Group's $25 billion deal in 2014, at approximately $100 billion. PetroChina Company Limited (PTR) is the latest Chinese oil major to consider taking part in the IPO, according to Reuters. Earlier this week, China Petroleum & Chemical Corp. said that Saudi Aramco had invited it to participate in the IPO.
"We talked with them on the plan, and generally speaking we had a very good conversation," chairman of Chinese Petroleum & Chemical Wang Yupu said of the offer from Aramco, during a briefing in Hong Kong, according to a Bloomberg report. "Going forward, based on our own reality and needs, we will get into more detailed conversations with them."
China Investment Corp., the country's sovereign wealth fund has also held talks with Saudi Aramco about an investment, which suggests the key role that China will likely play in the IPO and underscores how unique the Saudi Aramco IPO is, both in size and geopolitical implications.
Shares of Saudi Aramco will be listed on the Saudi stock exchange, the Tadawul. The company has yet to pick a foreign exchange place to list, however, TheStreet reported on last week that Saudi Aramco and the New York Stock Exchange are in advanced talks.
Editor's Pick: This story was originally published on March 30 at 4:30 p.m.