Aramco restricts foreign investors’ subscription in IPO through QFIs, swap agreements
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Saudi Aramco, the world’s largest oil producer, floated a 1.5% stake, or 3 billion shares on Nov. 17 in its initial public offering (IPO) for retail and institutional investors.
Foreign investors are allowed to buy Aramco’s shares through qualified foreign financial institutions (QFI), under the rules regulating qualified foreign financial institutions investment in listed securities (QFFIILS).
The Capital Market Authority (CMA) has exempted non-resident institutional foreign investors that intend to subscribe to Aramco’s shares, and that meet the qualification conditions under QFI rules, from certain formalities to achieve QFI status.
Foreign investors that are not already registered as QFI in Saudi Arabia are required to engage with their global custodian in advance of the book-building process in order to enable participation in the Saudi Aramco IPO.
The global custodian will ensure the qualification of the Foreign Investor under the QFFIILS and the local custodian will in turn ensure all the necessary arrangements to enable the Foreign Investor to participate in the IPO.
The market regulator also issued a decision enabling certain non-financial institutions intending to participate in the IPO that do not meet the qualification conditions under QFI rules to be considered as qualified Foreign Investors.
Each Foreign Investor will require:
1) A National Identification Number (NIN) and a portfolio account opened at the Saudi Central Securities Depositary (Edaa);
2) Access to its own custody account in Saudi Arabia;
3) A live securities account in their name through their global custodian;
4) A trading account with its respective local broker(s) to enable trading