Saudi Aramco raised $26 billion in its record-shattering IPO — but banks will get paid an abnormally small 0.25% of that

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  • Saudi Aramco’s initial public offering broke the record for size and largest proceeds when it raised $US26 billion in early December.
  • But banks that worked on the deal will be paid a combined $US64 million, roughly 0.25% of the total deal value,Bloomberg reported Thursday, citing sources familiar with the matter.
  • The payout is so low because Saudi Aramco decided to keep its mega-IPO local, according to the report.
  • Watch Saudi Aramco trade live on Markets Insider.

Saudi Aramco’s record-breaking $US1.7 trillion IPO won’t lead to a similarly exorbitant payday for investment bankers who aided the oil giant in the going-public process.

Banks that worked on the IPO are slated to be paid a combined $US64 million, Bloomberg reported Thursday, citing sources familiar with the matter.

That’s just 0.25% of the total value of the behemoth IPO, which raised roughly $US26 billion for Saudi Aramco. The measly payout is because Saudi Aramco decided to keep the IPO a local affair, according to the report.

The top local banks that helped Aramco as joint global coordinators will be paid 39 million riyals, or $US10.4 million each, according to Bloomberg. Aramco had nine joint global coordinators, including Goldman Sachs, Morgan Stanley, and JPMorgan.

The top foreign banks – a total of 16 worked with the oil company -will get a lesser sum of 13 million riyals or $US3.5 million for helping with the deal. Local banks that acted as bookrunners will get about 5 million riyals, while foreign bookrunners will take home about 2 million riyals each, according to the report.

That means that foreign banks that worked with Aramco will likely not make enough to cover the costs of the deal, Bloomberg reported previously.

The Saudi Aramco payout is also a far cry from what banks generally make in the IPO process. When Alibaba went public, the former record holder for the world’s largest IPO paid banks that it worked with about $US300 million, according to the report.

Since its blockbuster IPO, Saudi Aramco has swelled to a market valuation of $US2 trillion, breaking yet another world record. Still, at least one Wall Street analyst has urged investors to sell the stock now, saying the company’s price surge is “too much, too soon.”