‘Ken of Arabia’ secures lead adviser role on Saudi Aramco IPO

Ken Moelis has built his three-decade long dealmaking career on winning big business outside of the New York bubble, notably by helping casino tycoon Steve Wynn revive the Las Vegas Strip.

But with Moelis & Co having secured the role of lead independent adviser on the planned initial public offering of Saudi Aramco, the veteran banker’s status on Wall Street is set to be elevated to a whole new level.

“If he pulls this one off we’ll be renaming him Ken of Arabia,” says a senior executive at a rival New York investment bank. “It won’t be easy dealing with a client that is not your traditional [US] chief executive, [but] then again Ken is used to dealing with eccentric tycoons.”

The race to become lead adviser to what is expected to be the world’s largest IPO — Saudi officials hope it could value the state-owned company at $2tn — was a tough one. And as a relatively new investment bank, Moelis & Co was not the obvious frontrunner.

For months Saudi Aramco has invited banks to its headquarters in Dhahran to pitch for advisory and underwriter roles on the IPO, in which the world’s largest oil producer could sell a 5 per cent stake to investors.

According to two people with knowledge of the situation, Evercore and Rothschild appeared to be the top contenders for the advisory role, given their experience working on large IPOs of state-controlled assets.

However, Moelis ended up winning the race as its founder convinced executives at Saudi Aramco about his boutique firm’s ability to navigate what is likely to be a complex flotation.

“What do they [Moelis] know about oil and gas privatisations? . . . Ken Moelis is a fantastic pitcher for business,” says a rival banker close to the process. “There’s probably no one better anywhere. But Moelis’s equity people have never done anything like this before.”

As the lead adviser, Moelis will oversee underwriters and other preparations for the IPO, including helping make decisions such as where Saudi Aramco will list.

While the shares will be quoted on Riyadh’s Tadawul, Saudi officials are weighing the prospect of multiple overseas listings: including London, New York, Hong Kong and Tokyo.

New York is likely to be contentious given US legislation that allows families of victims of the 9/11 terror attacks to sue Saudi Arabia.

But the selection of New York-based Moelis as lead adviser may suggest a US listing could be back in favour.

JPMorgan, which has been Saudi Aramco’s commercial banker for years, is in pole position to be one of the main underwriters, according to several people following the process.

JPMorgan and Michael Klein, a former star Citigroup banker, have been working with Saudi officials on a broad range of matters related to the IPO and are expected to continue doing so.

For Mohammed bin Salman, the hard-charging deputy crown prince of Saudi Arabia, the flotation is the centrepiece of his ambitious plan to modernise and revive the waning Saudi economy through a privatisation programme.

Any proceeds from the offering would be ploughed into non-oil investments as the country seeks to diversify its economy away from oil.

Saudi Aramco, Moelis, JPMorgan and Rothschild declined to comment. Evercore did not immediately respond to a request for comment.

Ken Moelis is a fantastic pitcher for business. There’s probably no one better anywhere. But Moelis’s equity people have never done anything like this before

Prince Mohammed has asked those working on the IPO to speed up the process as he seeks a flotation as early as possible in 2018, says one person familiar with negotiations with advisers.

Mr Moelis is now gearing up to get that accomplished. For his firm, which was only founded in 2007, landing the Saudi Aramco IPO vindicates a strategy that has focused on dealmaking the old-fashioned way — based on a partnership business model.

By spreading the firm’s franchise across a global network, with experienced bankers in regions where few other boutique firms have a presence, Moelis has gained an edge to rapidly grow its business focused on mergers and acquisitions, restructuring and IPOs.

In the Middle East, Moelis built a sizeable team that has worked closely with large companies including Dubai World and Abraaj, an influential private equity fund in the United Arab Emirates. This team liaises with specialists in London, New York and Houston, where Moelis recently made several big hires.

In 2014 Moelis recruited Eric Cantor, the former Republican majority leader in the US House of Representatives, in what many on Wall Street saw as a shrewd move to increase the bank’s clout in Washington and overseas.

Mr Moelis, a Republican who was among the first on Wall Street to say that Donald Trump’s presidential campaign could succeed, said at the time that hiring Mr Cantor would expand its ability to help clients better navigate complex situations around the world.

Additional reporting by Simeon Kerr, Nicole Bullock and David Sheppard