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Citigroup among banks leading Aramco refinery unit’s IPO

Citigroup Aramco
An employee looks out across oil pipes used for landing and unloading crude and refined oil at the North Pier Terminal, operated by Saudi Aramco, in Ras Tanura, Saudi Arabia, on Monday, Oct. 1, 2018. Photographer: Simon Dawson/Bloomberg

Citigroup is among the banks leading the planned initial public offering of Saudi Aramco Base Oil, a unit of the state-controlled oil producer, according to people familiar with the matter.

Luberef, as the refining company is also known, plans to launch its IPO in the second half of the year, the people said, asking not to be identified discussing private information. The local unit of HSBC Holdings and SNB Capital are also advising on the offering, which could raise about $1 billion.

Luberef would join several Aramco subsidiaries already listed on Saudi Arabia’s stock exchange, including chemicals maker Saudi Basic Industries and Rabigh Refining & Petrochemical.

Aramco is separately considering selling stakes in its trading business and retail fuels unit, and also mulling a secondary stock offering of its own, Bloomberg News has reported. If these share sales materialize, they could add billions to an already hefty IPO haul in the Middle East.

While rampant inflation, tightening monetary policy and Russia’s war in Ukraine have dampened listings activity globally, the Middle East has mostly bucked the trend. High oil prices have been a boon for the region’s energy companies and buoyed local stock markets.

Saudi Arabia-based investment firm Jadwa is expected to sell a 30% stake in Luberef in the IPO. The company acquired the holding in 2007 from Exxon Mobil, which originally invested in the development of Luberef’s refinery in 1978.

Representatives for Aramco, Citigroup and Jadwa declined to comment, while a spokesperson for Luberef didn’t immediately respond to requests to comment.

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