Saudi refinery unit names banks for $1 billion IPO

A refining unit of the state-owned oil producer, Bloomberg named banks including Citigroup and HSBC Holdings Plc for its initial public offering on the Saudi stock exchange, which could raise around $1 billion.

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The company, known as Luberef, plans to sell 50 million shares, or a nearly 30% stake, according to a statement. SNB Capital was hired as a lead manager, financial adviser, book-runner, global coordinator and underwriter. The financial advisers, book-runners, global coordinators and underwriters were named by Citigroup Saudi Arabia, HSBC Saudi Arabia, and Morgan Stanley Saudi Arabia.

The bidding period for participating parties and book-building process ends on December 4 for six days, according to the prospectus. The final allocation of the offer shares will be announced on December 14 for two days, and the subscription period opens on December 14 for individual investors.

The refinery business, with operations in Saudi industrial cities Jeddah and Yanbu, is 70% owned by Saudi Aramco, while the rest is held by local private equity firm Jadwa Investment. The offering consists of Jadwa s sale of its shares in Luberef, while Saudi Aramco is keeping its stake. The offering could raise about $1 billion, according to Bloomberg in June.

The Persian Gulf, one of the world's IPO hotspots this year, accounts for almost half of the proceeds from new share listings across Europe, the Middle East and Africa. Share sales elsewhere have dried up because of the aggressive interest rate rises, Middle Eastern markers have benefitted from high oil prices, and Saudi Arabia alone has seen a record 27 IPOs this year, according to data compiled by Bloomberg.

Exxon Mobil Corp bought its Luberef holding in 2007 and Exxon had originally invested in the refinery in 1978.

Luberef operates two production facilities in Yanbu and Jeddah on the west coast of Saudi Arabia. It produces various base oils and byproducts, including asphalt, marine heavy fuel oil and naphtha. They are sold mainly in the Middle East, North Africa and India. It sells across Asia, the Americas and Europe.

Demand for base oils is expected to grow by about 5 million metric tons between 2022 and 2030, according to a company statement. Strong macro fundamentals in Saudi Arabia and the Middle East are key end-markets for Luberef, which supports the demand outlook for base oils. The statement was made by Luberef, who will focus on growth in key end-markets, especially where market dynamics present attractive demand outlooks, said Tareq Alnuaim, president and chief executive officer of Luberef.

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