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Aramco’s IPO: A bell weather of Saudi balancing between East and West

By James M. Dorsey 25 August 2019

A podcast version of this story is
available on
Itunes, Spotify, Stitcher, TuneIn, Spreaker, Pocket
, Tumblr, and Patreon, Podbean
and Castbox.

Saudi Arabia’s planned awarding of
mandates for the management of an initial public offering (IPO) by its national
oil company Aramco is likely to serve as a bell weather for how Riyadh balances
its relations with the United States and China.

In an early indication that Western
financial institutions like Goldman Sachs may be losing their near monopoly,
Saudi Arabia this week invited China’s biggest
state-owned banks
Industrial & Commercial Bank of China Ltd (ICBC) and Bank of China Ltd to
pitch alongside major US, European and other Asian underwriters for the mandate
of what is expected to be the largest listing ever.

Analysts took the invitation to
Chinese institutions as a sign that Saudi Arabia was considering Hong Kong in
addition to London, New York and Tokyo as possible exchanges on which to list
the five percent stake in Aramco that would be on offer.

ICBC, the world’s largest lender by
assets, is the only major Chinese state-owned bank to have a commercial banking
presence in the kingdom. Bank of China’s London branch was a co-manager on
Aramco’s US$12 billion bond sale in April.

The invitation to the two Chinese
banks came as US investment bank and financial services giant Goldman Sachs was
believed to have significantly enhanced
its chances
as the
result of a sustained high-level lobbying effort.

Goldman had failed to secure a
prominent role in 2017 when Aramco initially nominated major Western
to manage the
IPO. The offering was ultimately postponed after Crown Prince Mohammed bin
Salman failed to persuade the market to adopt his US$2 trillion valuation of

The success of the bond sale, months
after the killing of journalist Jamal Khashoggi, that attracted more than $100
billion of investor orders persuaded Prince Mohammed that he might be able to
pull off the Aramco offering. Goldman Sachs was the bond’s bookrunner.

Chinese state-owned oil companies
PetroChina and Sinopec offered to buy the stake
when the kingdom first announced
that it wanted to sell five percent of Aramco in the hope of raising US$100

The sovereign funds of Russia, Japan
and South Korea also signalled an interest in becoming cornerstone investors.

Granting a Chinese bank a leading role
in the IPO would further cement the kingdom’s pivot
towards Asia.

It would underline Saudi Arabia’s ever
greater economic interdependence with Asia that it needs to balance with its
increasingly uncertain security relationship with the United States and Europe
and reliance on Washington in its struggle against Iran.

The kingdom’s relations with its
onetime main ally have changed as the United States becomes less dependent on
energy imports on the back of shale oil and renewables.

On the flip side, Saudi Arabia last
year accounted for some 12 percent of Chinese oil imports and its share has since
almost doubled.
US-China trade war has prompted Chinese buyers to reduce oil purchases from the
United States and look elsewhere.

China and Saudi Arabia earlier this
year inked deals worth US$28
, including a
Saudi commitment to build a $10 billion
petrochemical complex
China that will refine and process Saudi oil. Saudi Arabia has also invested in energy
assets in the United States

Talk of Saudi energy investments in
China first emerged two years ago at the time that a possible direct Chinese
investment in Aramco was being touted.

Meanwhile, Saudi relations with the US
are troubled by a growing sense that the United States will
over time reduce its security commitment to the Gulf
and mounting questioning in the US
Congress of the alliance with the kingdom as a result of its disastrous
four-year-long war in Yemen and the killing of Mr. Khashoggi.

Some analysts suggest that the
kingdom’s revival of the prospects of an Aramco IPO is a political ploy rather
than a serious effort to sell a stake in an asset that generates the bulk of
the state’s revenue. The revival coincided with Saudi plans to accelerate
privatization of other state assets

The IPO “is wheeled out to investors
the same way an ailing, elderly Arab ruler is put on display — to remind subjects of
the immense power of patronage, and the threat of retribution for disloyalty
. But it is also sad and tiresome, a
farce that everyone knows is a representation of the past and not where things
are headed. The Aramco IPO has become a regular reminder to those in the
finance world who depend on the Saudi government for fees, for access to deals
and for that slim possibility that the offering goes through. The message is
clear — stay loyal, just in case,” said Gulf scholar Karen Young, writing in

Ms. Young argued that Aramco’s
ambition to diversify into refining, gas and petrochemicals neatly aligns
itself with Prince Mohammed’s effort to diversify and streamline the Saudi
economy. She notes that expanding the company’s shareholder base could
complicate the oil company’s ability to execute its plans.

Said Ms. Young: “Any discussion of the
Aramco IPO always ends on the same note. It is a political decision, which the
company will have to be prepared to accept. Oil prices are not helping, as they
continue to be depressed, despite rising political tensions in the Persian
Gulf. If the government wants to keep its Aramco prize and be able to use its
energy resources to wield political influence, it is better off making a deal
with China to buy a small stake in the company.”

Source: Ipo Search Results

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Chuck Hansen to Present New Standards for Testing Cured-In-Place Pipes as ‘Watertight’ at Australian No-Dig Conference

Chuck Hansen to Present New Standards for Testing Cured-In-Place Pipes as ‘Watertight’ at Australian No-Dig Conference – World News Report – EIN News

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Source: Ipo Search Results

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Brazilian Sanitation Co Igua Saneamento Asks For Cvm Approval To Initial Public Offering- Filing

Friday, 23 Aug 2019 05:20pm EDT 


Source: Initial Public Offering Search Results

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U.S. IPO Weekly Recap: Datadog And Ping Identity Join September’s IPO Lineup

No companies went public in the US this past week, but new IPO filings continued to pour in ahead of the September pick-up. The two software providers could fetch billion-plus valuations, Datadog (DDOG) and Ping Identity (PING).

LBO’d by Vista Equity Partners in 2016, identity access management platform Ping Identity is highly profitable with a 22% EBITDA margin, and grew sales by about 14% in 1H19 to $113 million. Backed by Index Ventures, Datadog grew sales by 79% in 1H19 to $153 million, with a near-breakeven EBITDA of -2%.

Three healthcare filers joined the IPO pipeline, including 10x Genomics (TXG), a life sciences technology firm backed by Foresite Capital and Venrock and valued at more than $1 billion privately. Two biotechs also filed, cancer-focused antibody developer IGM Biosciences (IGMS) and inhaled therapy developer TFF Pharmaceuticals (TFFP).

Additionally, two SPACs filed for IPOs, Experience Investment Corp (EXPCU) and New Providence Acquisition (NPAU).

7 Filings During the Week of August 19th, 2019








Morgan Stanley

Provides a monitoring and analytics platform for companies’ technology stack.

Experience Investment



Deutsche Bank

Leisure-focused blank check company led by a team from KSL Capital Partners.

New Providence Acq.




Blank check company targeting the consumer industry.

Ping Identity




Provides an enterprise security platform focused on identity access management.

TFF Pharmaceuticals



National Sec.

Early-stage biotech developing dry-powder therapies for lung diseases.

10x Genomics




Makes instruments and other technology for analyzing biological information.

IGM Biosciences




Early-stage biotech developing antibody therapies for cancer.

In other IPO news, VMware (NYSE:VMW) announced that it would acquire two companies that IPO’d in 2018, cybersecurity play Carbon Black (NASDAQ:CBLK) and software development platform Pivotal Software (NYSE:PVTL). Recent IPO Fastly (NYSE:FSLY) soared more than 50% this past week to a new all-time high, a strong sign for close peer and upcoming IPO Cloudflare (NET).

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 8/22/19, the Renaissance IPO Index was up 33.7% year-to-date, while the S&P 500 had a gain of 16.6%. Renaissance Capital’s IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Roku (NASDAQ:ROKU). The Renaissance International IPO Index was up 10.8% year-to-date, while the ACWX was up 5.9%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include Meituan-Dianping (MEIT) and SoftBank Corp. (OTCPK:SFTBY).

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Source: Ipo Search Results

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Cloudflare IPO: 5 things to know about the cloud-network platform

Cloudflare Inc. is looking to be the next big tech company to go public, and investors who climbed on board a decade ago stand to reap huge rewards.


NET, +0.00%

 announced it plans to go public with a Securities and Exchange Commission filing on Aug. 15 that states an intention to raise up to $100 million, but that number is usually used as a placeholder on an initial filing and is subject to revision. The company specializes in a cloud-based network platform that promises security, enhanced performance of business-critical applications, and “eliminating the cost and complexity of managing individual network hardware.”

The announced IPO comes just a few months after cybersecurity company CrowdStrike Holdings Inc.

CRWD, -4.88%

  went public in June. While CrowdStrike shares are trading 179% above their IPO price, the ETFMG Prime Cyber Security

HACK, -1.75%

is up 13% for the year while the Renaissance IPO ETF

IPO, -2.53%

is up 32%, and the First Trust Cloud Computing ETF

SKYY, -2.03%

is up 19%, compared with a 20% gain in the tech-heavy Nasdaq Composite Index

COMP, -3.00%.


Goldman Sachs, Morgan Stanley and J.P. Morgan are among the underwriters, and the company plans to list under the ticker “NET” on the New York Stock Exchange.

Here are five things to know from the company’s filing.

Cloudflare sees itself ahead of the curve compared with many big players

The San Francisco-based company said its service blocks 44 billion cyber threats from 20 million internet properties daily, and that it is better suited to today’s cloud environment. Security patches are no longer hardware-based “Band-Aid boxes,” and even if they were, they would be incapable of scaling and are largely incompatible with cloud-based architectures.

“This is forcing a major architectural shift in how enterprises address security, performance, and reliability at the network layer,” Cloudflare said. “The functionality provided by companies such as Cisco Systems

CSCO, -3.26%

 , Juniper Networks

JNPR, -2.98%

 , F5 Networks

FFIV, -3.83%

 , Check Point Software

CHKP, -2.00%

 , Palo Alto Networks

PANW, -1.46%,


FEYE, -0.52%,

Riverbed Technology and others is being elevated, abstracted and unified into the cloud.”

“This transition has created a vast opportunity both in expanding the market to address underserved businesses and replacing Band-Aid box vendors, and the budget spent on their increasingly obsolete devices, in the enterprise,” the company said. “Cloudflare is leading this transition.”

Expenses are outpacing revenue growth

In 2018, Cloudflare reported a loss of $86.1 million on revenue of $192.7 million, compared with a $10.7 million loss on revenue of $134.9 million in 2017. So while revenue grew 43%, expenses skyrocketed 711%. That appears to have been due to a big jump in general and administrative expenses, which jumped to $85.2 million in 2018, from $20.3 million in 2017

“We expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future to support our growth as well as due to additional costs associated with legal, accounting, compliance, insurance, investor relations, and other costs as we become a public company,” Cloudflare said in its filing.

A growing unicorn

Back in 2012, Cloudflare was already valued at $1 billion based on $72 million in funding, according to The Wall Street Journal. Since then, the company received $150 million in Series E funding from Franklin Templeton Investments in March, for 176,000 Class B shares and placement of Franklin’s Stanley Meresman on the board, pushing the valuation to $3.1 billion, based on $332.1 million in total funding, according to Crunchbase.

Early investors stand to make out like bandits, with lots of power

As is the case with many tech unicorns, Cloudflare is offering Class A shares in the IPO, which are currently dwarfed in number by Class B shares, which carry 10 votes compared with the one vote that a Class A share commands.

When Cloudflare had its Series A funding round in 2009, Pelion Ventures and Venrock invested a total of $2.1 million in the company. Should Cloudflare’s valuation come in at $3 billion, that would mean about $1 billion for Pelion and Venrock, or about 500 times their original investment. When it comes to voting power, Pelion Ventures has 20.6% of voting shares, and Venrock has 19.1%.

New Enterprise Associates, which invested $20 million in Series B funding in 2011, controls 22.7% of voting shares, which would come to about $681 million in a $3 billion valuation, or about 34 times the original investment. In 2015, Fidelity Investments put in $110 million in a Series D round for 14.3 million one-vote Class A shares.

In Cloudflare’s management, Chief Executive and Chairman Matthew Prince controls 19.8% of voting shares, and Chief Operating Officer Michelle Zatlyn controls 6.6% of voting shares.

The company can’t please everyone

Cloudflare dropped 8chan as a customer in August, condemning the unmoderated message board as “a receptive audience for domestic terrorists” following recent mass shootings, and this appears in the company’s “risk factors” section. Cloudflare noted that it was not the first time a customer elicited scrutiny after a violent attack.

“We also received negative publicity in connection with the use of our network by 8chan, a forum website that served as inspiration for the recent attacks in El Paso, Texas and Christchurch, New Zealand,” Cloudflare said. “We are aware of some potential customers that have indicated their decision to not subscribe to our products was impacted, at least in part, by the actions of certain of our paying and free customers.”

“Conversely, actions we take in response to the activities of our paying and free customers, up to and including banning them from using our products, may harm our brand and reputation,” the company said. “Following the events in Charlottesville, Virginia, we terminated the account of The Daily Stormer. Similarly, following the events in El Paso, Texas, we terminated the account of 8chan. We received significant adverse feedback for these decisions from those concerned about our ability to pass judgment on our customers and the users of our platform, or to censor them by limiting their access to our products, and we are aware of potential customers who decided not to subscribe to our products because of this.”

Source: Ipo Search Results

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Waiting in the wings: Is the time and IPO strategy right for GoAir?

The management of Wadia-group controlled is in a huddle these days, finalising its plan to raise about Rs 1,500-Rs 2,000 crore through an initial public offer (IPO). While the idea may not be new, for the airline has been toying with it at least since 2015, it has gathered momentum at a time when the sector is dealing with tepid growth in air travel and volatile crude oil prices.

Further, investors’ sentiment has also taken a hit in the past two months. Consider this: the benchmark S&P BSE Sensex had gained around 10 per cent between January and June 2019. The gains, however, are down to just over 3 per cent year-to-date (YTD).

That apart, volatility in the equity market saw the fund mobilisation, during the first half of the calendar year 2019 (H1CY19) via IPO route, hit a four-year low. Analysts have attributed the tepid H1CY19 to the overall market sentiment. Besides, the overall economic scenario has kept companies at bay from raising fresh capital, they say.

Given this backdrop, budget carrier GoAir’s plan to raise funds via IPO does raise concerns over its timing, route, and success. That said, even though the public listing has been tepid in 2019, it maybe the best for the aviation sector, experts say.

“While the Qualified Institutional Investors (QIP) route is available only to already-listed companies, Private Equity (PE) investors target returns over a specific period of time, which is not possible in the aviation sector,” says Mark Martin, founder and CEO of Martin Consulting LLC.

Typically, PE investors eye an investment return of 25 per cent over three-five years, which is not possible in the aviation sector given the uncertainties. Airlines need a gestation period of at least 10-15 years, experts say.


An IPO at this juncture, analysts feel, may open expansion routes for GoAir, which hasn’t truly reaped benefits of the vacuum created by Jet Airways.

“It hardly took nine-10 slots of Jet, probably, due to lack of funds… The vacuum that has been created in the market is an opportune time for the airline to expand,” says AK Prabhakar, head of research, IDBI Capital.

The airline has doubled its fleet size in less than two years from just 25 planes in its fleet till November 2007. In July, it added 50th aircraft in the fleet.

At the bourses, stocks of airlines have done fairly well than the benchmark indices. Budget carriers SpiceJet and IndiGo airlines have outperformed the frontline S&P BSE Sensex over the last one year. While the former grew 66 per cent, the latter gained 51 per cent. In comparison, the Sensex has declined 3 per cent during the same period. Beleaguered Jet Airways, however, has tumbled 88 per cent during the period under review.


Fundamentally, the airline is on a strong footing and has consistently registered growth in profit and operating revenue for the past six years. For the 2017-18, the airline logged a net profit of Rs 295 crore and had a revenue of Rs 4,672 crore, data show.

Strong fundamentals, including low crude oil prices, stable air-travel demand, and a range-bound rupee, analysts believe, make a strong case for the airline’s expansion.

According to Directorate General of Civil Aviation (DGCA) data, the airline has consistently increased its market share between Q4FY19 and Q1FY20. It held a market share of 9.2 per cent at the end of March 2019, which stands at 11 per cent, as of June 2019.

has good yields and EBITDAR figures has pending orders for more than 140 aircraft, and has the ability to fill the vacuum created by Jet Airways,” says Gagan Dixit, vice-president for institutional equities at Elara Capital.


Instability in management, however, remains a concern. The airline has no chief executive officer (CEO) as of now, but recently inducted a chief financial officer (CFO), a vice president, and heads for network planning, to focus on international operations, revenue management and flight operations.

So far, there has been no official communication from the airline confirming the listing, but media reports suggest that the LCC is looking to appoint bankers for its IPO. According to reports, the airline is expected to soon issue a Draft Red Herring Prospectus (DRHP) with an issue price in the range of Rs 700-Rs 1,200 per share.

Dixit of Elara Capital says the airline should go public before state-owned Air India is privatised as investors’ appetite is likely to reduce after this. Martin advises the airline to get listed by the third quarter (October-December) of FY20.

Source: Ipo Search Results

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SpringWorks Therapeutics Files To Start IPO Process

Quick Take

SpringWorks Therapeutics (SWTX) has filed to raise gross proceeds of $115 million from a U.S. IPO, according to an S-1 registration statement.

The firm is focused on the development and commercialization of treatments for rare diseases.

SWTX is a mid-stage biopharma with two commercial collaborations for its earlier-stage pipeline.

I’ll provide an update when we learn more IPO details from management.

Company & Technology

Stamford, Connecticut-based SpringWorks was founded in 2017 and focuses on the acquisition, development, and commercialization of treatments for rare diseases and cancer.

Management is headed by CEO and Director Saqib Islam, who has been with the firm since inception and was previously Chief Business Officer at Moderna Therapeutics.

SpringWorks’ lead drug candidate is Nirogacestat, an oral small molecule gamma-secretase inhibitor [GSI], currently in development for the treatment of desmoid tumors.

Desmoid tumors occur rarely and are often debilitating as they disfigure soft tissue for which there are currently no therapies approved by the US FDA, according to management.

Below is a brief overview video of Lara Sullivan, company founder, discussing gamma-secretase inhibitors and desmoid tumors:

Source: CheckRare

SWTX licensed nirogacestat from Pfizer (PFE) in August 2017, and the FDA has since granted the compound Orphan Drug Designation and Fast Track Designation for this indication.

In May 2019, the firm announced the initiation of the ‘DeFi’ trial, which is a potentially-registrational Phase 3 clinical trial of the company’s lead drug candidate for patients with desmoid tumors.

Below is the current status of the company’s drug development pipeline:

Source: Company registration statement

Investors in SpringWorks include OrbiMed, Bain Capital, LifeArc, Perceptive Advisors, Boxer Capital (LON:TAVI), HBM Healthcare Investments (SWX:HBMN), BVF Partners, Surveyor Capital, Samsara BioCapital, ArrowMark Partners, as well as other institutional investors. Source: Crunchbase, company registration statement

Market & Competition

According to a recent market research report by Market Research Future, the global desmoid tumors market is projected to grow at a CAGR of 4.5% between 2017 and 2023.

The main factors driving forecasted market growth are the rising demand for effective chemotherapy treatments, high unmet clinical needs of current treatments, as well as an increase in research and development investment.

According to the US National Library of Medicine, desmoid tumors’ rate of occurrence is estimated at 1 to 2 per 500,000 people globally, while nearly 900 to 1,500 new cases are registered annually in the US.

Currently, utilized practices and medicines for desmoid tumor treatment include anti-inflammatories, chemotherapies, hormone therapies, and surgeries among others, while various other agents under development, such as Angiogenesis inhibitors.

Major competitors that provide or are developing desmoid tumor treatments include:

  • Ayala Pharmaceuticals
  • Bayer (OTCPK:BAYRY)
  • Cellestia Biotech
  • Iterion Therapeutics
  • Array BioPharma (NASDAQ:ARRY)
  • AstraZeneca (AZN)
  • Daiichi Sankyo (OTCPK:DSKYF) (OTCPK:DSNKY) (TYO:4568)
  • Exelixis (EXEL)
  • F. Hoffmann-La Roche (OTCQX:RHHBY)(SWX:ROG)
  • Infixion Bioscience
  • NFlection Therapeutics

Source: Sentieo

Financial Status

SpringWorks’ recent financial results are typical of clinical-stage biopharma firms in that they feature no revenue and significant R&D and G&A expenses associated with the firm’s pipeline.

Below are the company’s financial results since inception (Audited PCAOB for full years):

Source: Company registration statement

As of June 30, 2019, the company had $185.3 million in cash and $11.0 million in total liabilities. (Unaudited, interim).

IPO Details

SWTX intends to raise $115 million in gross proceeds from an IPO of its common stock, although the final figure may differ.

No existing shareholders have indicated an interest to purchase shares of the IPO, although I would expect to see this element in future filings.

Per the firm’s latest filing, it plans to use the net proceeds from the IPO as follows:

to fund our ongoing Phase 3 DeFi trial of nirogacestat in patients with desmoid tumors and, if the results from this trial are favorable, to file for regulatory approval in the United States and select international markets;

to fund our upcoming Phase 2b ReNeu trial of mirdametinib in patients with NF1-PN and, if the results from this trial are favorable, to file for regulatory approval in the United States and select international markets;

to fund our ongoing Phase 1b trial of mirdametinib and lifirafenib and, if initial results are favorable, to fund additional expansion cohorts;

to further develop our lead product candidates as standalone or combination therapies in new oncology and rare disease indications; and

the remainder, if any, for working capital, general corporate purposes and to continue building our clinical development, medical affairs and commercial infrastructure to support the advancement of our product candidates.

Management’s presentation of the company roadshow is not yet available.

Listed underwriters of the IPO are JPMorgan, Goldman Sachs, Cowen, and Wedbush PacGrow.


SpringWorks seeks public capital to fund its Phase 3 and Phase 2 trials for its lead candidates.

Its lead candidate for the treatment of desmoid tumors is already in Phase 3 trials.

The IPO net proceeds, combined with the firm’s existing cash resources, should position SWTX well for reaching its next milestones with ample resources.

The market opportunity for the treatment of desmoid tumors is growing moderately and is difficult to determine the exact size; the firm faces significant market competition.

SWTX has developed two commercial collaborations – BeiGene (NASDAQ:BGNE) and GlaxoSmithKline (GSK), although the programs for those two partnerships are still in Phase 1 safety trial stages.

Management’s assumptions about valuation will be important as will existing investor support or lack of support for the IPO.

I’ll provide an update when we learn more IPO details.

Expected IPO Pricing Date: To be announced.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Ipo Search Results

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Oil giant Saudi Aramco taps boutique banks for advice ahead of its IPO

The boutique investment banks have started preparatory work on the offering, according to the sources, who asked to remain anonymous. The banks are expected to play a key role in the listing, including in the selection of underwriters and listing venues, as well as working to ensure Aramco can secure its valuation expectations.

The selection is a boon particularly for Lazard, which was not one of the advisers on Aramco’s first listing attempt. The oil producer was originally working with Evercore and Moelis, as well as HSBC, JPMorgan Chase and Morgan Stanley.

However, Lazard’s success working on the blockbuster Aramco bond sale this year put it in pole position to secure a role on the IPO.

The bank was pushing hard in recent weeks to win a spot on the planned share sale, even sending some of its top global dealmakers from London, Paris and Houston to woo Aramco officials at meetings in the Middle East, it was reported earlier this week.

The firm, run by Ken Jacobs, is likely to replace one of the original advisers that previously worked on the listing plans, people with knowledge of the matter have said.

Aramco, which is aiming for a stock market listing as early as 2020, is still planning to add more banks to the deal, the people said.

No final decisions have been made, and Aramco’s plans could still change or be delayed.

Representatives for Lazard and Moelis did not immediately respond to requests for comment. Aramco, officially known as Saudi Arabian Oil, declined to comment.


Irish Independent

Source: Ipo Search Results

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Delistings drag on Singapore’s recovering IPO market

There are about 14 companies undergoing privatisation in 2019.

Singapore’s IPO market will remain unsteady in the years ahead as the number of delistings in SGX continue to outnumber the volume of new listings, according to a Fitch Solutions report. This further builds on the IPO scene’s underwhelming performance in 2018.

As a result, the number of listed companies in the nation has declined for each full-year period since 2013 onwards through to the end of 2018, with expectations that the delisting trend will only gain further momentum.

“[W]e forecast the continuation of a worrying trend which is seeing a steady flow of public-to-private delisting deals on the Singapore Stock Exchange (SGX). This is bad news for both the IPO arena and local ECM more broadly,” the report stated.

Separately, DBS Group Holdings stated that there are about 14 companies undergoing privatisation this year. Bloomberg research points to aircraft maintenance firm SIA Engineering, event producer and promoter Unusual, engineering plastics producer Fu Yu Corporation, high-tech capital and consumer equipment service provider Frencken Group and luxury watch retailer The Hour Glass as potential delisting candidates before year-end.

“Meanwhile, we point to the climate of low valuations as largely to blame: the STI is trading at one-year forward price-to-book ratio of 1.05 compared with 1.34 for the MSCI Asean Index, according to Bloomberg data accurate to August 12 2019. SGX data also show that equity flows are heading in a similar direction too, with institutional investors net selling -$981.7b during the month of July,” the report noted.

As an attempt to make the number of delistings grow slower, SGX has revised its rules on the delisting process to make it “less favourable, rather than stop them completely.” 

Under the new laws, companies looking to voluntary delist will now have to pay a higher premium to get a deal completed; receive the approval of 75% of shares held by independent shareholders; and gain the approval of the appointed independent financial advisor (IFA) that they are both ‘reasonable’ and ‘fair’.

Singapore’s IPO market is starting to rebound from its 2018 performance as IPO deals in YTD climbed to $1.54b (US$1.11b) from nine IPO deals, surpassing share sales of $1.27b (US$920m) raised from 24 floats in the previous year, the report cited data from Zephyr.

“Whilst the STI’s 2019 performance appears impressive at first glance, zooming out from the headline numbers suggests that the rebound has merely come from a low base to return to more historically average levels. In our view, the same can be said for new listing activity in the SGX,” Fitch Solutions explained.

Fitch Solutions noted that 2018 was an exceptionally slow year for floats and saw just four deals which raised over $138.5m (US$100m). The largest deal was the proposed US$245.4m float of an unknown stake in power distribution holding company Summit Power International. The deal failed to reach the market as it was postponed having cited a lack of demand from equity capital market (ECM) investors for non-real estate investment trust (REIT) listings on the SGX.

In H1, the two notable deals involved ARA US Hospitality Trust and Eagle Hospitality REIT. ARA US Hospitality Trust is the first listed US hospitality trust on the local bourse, which priced its stapled securities at $1.19 (US$0.88) apiece, whilst Eagle Hospitality REIT’s 580.56 million securities were offered at $1.06 (US$0.78) apiece. In addition, Prime US Real Estate Investment Trust’s IPO deal also went above $138.5m (US$100m) with a $408.54m (US$294.98m) float.

As all three deals are comprised of REITS and Summit Power is a non-REIT, Fitch noted that ECM investors are starting to lose appetite with non-REIT deals. 

“Such deals suggest that the SGX remains a go-to fundraising source for the Singaporean REIT sector, which continues to ranks as the biggest in Asia (excluding Japan). We note that there are 42 REITs and property trusts active in Singapore at the time of writing, with a combined market capitalisation of $90b representing a substantial portion of the real estate market,” Fitch solutions continued. 

Furthermore, ECM investors continue to receive support from the government as well, citing MAS’ decision way back 2015 when they decided to cut 60% leverage limit for REITs that retain a credit rating, which would subsequently be subject to the same limit as other REITs.

MAS added that it would raise the leverage limit for all REITs to 45% of the total assets, up from 35%. Furthermore, it increased the limit on property developments by 15-25% of a REIT’s assets to allow for more operational flexibility. 

Source: Ipo Search Results

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Week In Review: Chipscreen Gains 367% Following $148 Million Shanghai STAR IPO

Deals and Financings

China’s Chipscreen Bio (SHA: 688321) gained a huge 367% in its first trading session following its IPO on the Shanghai STAR exchange, giving the company a market cap of $4.2 billion. When the first 25 STAR Board IPOs hit the market last month, the average gain was 140%, which was considered a huge jump. Chipscreen’s gain was 2.5 times larger. Chipscreen develops small molecule drugs for cancer, diabetes, endocrine and autoimmune diseases. It priced its IPO 27% above its original target and raised $148 million, an amount that now seems charmingly quaint.

Nanjing Frontier Biotechnologies was approved to stage a $285 million IPO on the Shanghai STAR Exchange. Frontier has a China approved treatment for HIV, and it is developing another HIV treatment that it in-licensed from the Rockefeller University of New York City. Founded in 2002 by returnees, Frontier has developed a long-acting peptide drug discovery-development platform that is designed to transform any peptide drug into a long-acting agent. Frontier is developing its own drugs, but it also offers its platform to outside companies to develop long-acting formulations.

Beijing Baicare Biotech closed a $9 million B financing that was led by Sinopharm Capital and included the company’s existing shareholders. Formed in 2013, Baicare makes automated nucleic acid detection devices for clinical use using microfluidic chips and gene detection technology. The company offers a program to detect pathogenic bacteria and another to assess antibiotic/drug resistance that guides doctors toward more effective treatments. Because of its stature, Sinopharm will be able to help Baicare increase its visibility in the clinical diagnostic field.

Stemirna Therapeutics, a Shanghai RNA biopharma, raised nearly $14 million in a Series A financing. Founded in 2016 by a group of returning PhDs from MD Anderson Cancer Center in Houston, the company uses its proprietary Core Shell Structure Platform for mRNA Vaccines (LPP/mRNA) to discover new drug candidates. Currently, Stemirna is developing more than a dozen mRNA drug projects that are either mRNA personalized cancer vaccines or vaccines for infectious disease, protein defects or genetic diseases. The company claims to be the first and only platform-based mRNA R&D enterprise in China.

Vapo Health, a China medical device company specializing in nebulizers, completed a Series A financing led by CCB International. Although the specific amount was not disclosed, it was reported to be in the “millions of dollars” range. Vapo offers a nano-scale atomized micro-hole technology to ensure consistent particle size. Formed in 2015, the company launched its first product in 2018. Vapo is already one of the top three dealers in Germany and Italy and exports its products to 14 countries, especially EU and US markets. Vapo is located in Kunshan, Jiangsu Province.

Qiyu Biotechnology, a Shanghai startup located in Zhangjiang Hi-Tech Park, completed a Series A round that raised “tens of millions of RMB” from Jundu Investment and Wosheng Capital. These proceeds are earmarked to support the pre-clinical development of the company’s large molecule candidates. Established in 2017, Qiyu is developing novel candidates to treat difficult cancers, autoimmune diseases and metabolic diseases for China and aboard. The company is a product of Zhangjiang’s Viva International Incubator.

Trials and Approvals

ASLAN Pharmaceuticals (NSDQ: ASLN, TPEx:6497) of Singapore provided an update on the progress of its three clinical-stage oncology and immunology candidates:

  • The company signed up K-MASTER to run a 400 patient South Korean Phase Ib/II trial of its lead drug, varlitinib, in patients with metastatic gastric cancer.
  • ASLAN003 started a four-arm Phase II clinical trial for advanced relapsed/refractory acute myeloid leukemia.
  • ASLAN acquired global rights to ASLAN004 for all indications from CSL in a $780 million deal. Previously, ASLAN had global rights only for asthma.

DelMar Pharmaceuticals (NASDAQ:DMPI) of Vancouver and Menlo Park reported early results from its China Phase II trial of VAL-083 as a first line treatment for glioblastoma multiforme. VAL-083 is being administered along with radiation to patients with newly-diagnosed, MGMT-unmethylated GBM. Among the first 17 patients who have had three post-treatment examinations, 53% showed a complete response and 41% had stable disease. Only one of the 17 has died. The trial is being conducted in collaboration with Guangxi Wuzhou Pharma, DelMar’s China partner.

Bio-Thera Solutions of Guangzhou began a China Phase I trial to examine the pharmacokinetics and safety of its BAT2506, a proposed biosimilar to Simponi (golimumab), a Janssen (NYSE:JNJ) treatment for arthritis/ulcerative colitis. The comparison trial is a randomized, double-blind, two-arm, parallel group study that will enroll approximately 182 healthy volunteers. Each volunteer will receive a single subcutaneous dose of either BAT2506 or Simponi. Bio-Thera develops novel drugs and biosimilars for cancer, autoimmune and cardiovascular diseases. Its other arthritis biosimilars mimic AbbVie’s (NYSE:ABBV) Humira and Genentech’s RoActemra.

Shanghai’s Zai Lab (NASDAQ:ZLAB) announced its electric field treatment for cancer, Tumor Treating Fields, was designated an Innovative Medical Device in China, which accelerates the approval process. Zai in-licensed greater China rights to the product from Novocare last year, and launched the product in Hong Kong in December as a treatment for glioblastoma multiform under the name Optune. Optune uses electric fields tuned to specific frequencies to disrupt cancer cell division, inhibiting tumor growth and inducing cancer cell death.

Disclosure: None

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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