Saudi Aramco abandons Morgan Stanley over gas pipeline deal – sources


DUBAI, July 12 (Reuters) – Saudi Aramco has dropped Morgan Stanley (MS.N) as an advisor for the sale of its gas pipelines and has chosen JPMorgan (JPM.N) and Goldman Sachs (GS.N) for the role, three according to sources familiar with the matter.

JPMorgan had also advised Aramco on the sale of the pipeline business, which was sold to a consortium led by Washington DC-based EIG Global Energy Partners for $ 12.4 billion. Read more

Aramco also called on banks for advice on financing the deal, sources told Reuters, the second major interim deal after the sale of the pipelines. Read more

The pipeline deal will also include an element of core financing arranged by Aramco for the buyer, similar to the pipeline transaction which was backed by $ 10.5 billion in bank loans, they said.

JPMorgan was also among the main arrangers of the loan that backed the pipeline deal, they said.

Morgan Stanley, who was among the top advisers for Aramco’s $ 29.4 billion initial public offering in 2019, also missed the role of pipeline advisor.

It was not immediately clear why Morgan Stanley was left out of the pipeline deal, sources said.

Aramco, Morgan Stanley, JPMorgan and Goldman Sachs declined to comment.

In recent years, Saudi Arabia has emerged as one of the largest markets in the Middle East for bankers keen to capture a share of business from new listings, as well as merger and acquisition activity.

Goldman also advised Aramco on its IPO and advised the sovereign wealth fund, the Public Investment Fund, on the sale of its majority stake in Saudi Basic Industries Corp (2010.SE) to Aramco, an agreement concluded last year.

The sale of the stake in the pipeline will have a structure similar to that of the pipeline deal, sources told Reuters earlier.

Aramco used a lease and leaseback agreement to sell a 49% interest in new Aramco Oil Pipelines Co to the purchaser and rights over 25 years of tariff payment for oil carried on its pipelines.

Additional reporting by Hadeel Al Sayegh; Editing by David Gregorio

Our standards: Thomson Reuters Trust Principles.

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