Aramco is mulling an IPO on Saudi exchange before making its much-anticipated global debut

PUBLISHED : Tuesday, 20 March, 2018, 9:28am
UPDATED : Tuesday, 20 March, 2018, 10:05am

Saudi Arabia’s state-owned oil giant Aramco is expected to list public shares on the Saudi domestic stock market in the second half of this year, but a potential international listing could come later, according to sources familiar with the situation.

The initial public offering of Saudi Aramco was expected to be the largest ever share listing. But plans to list on a major foreign stock exchange have been delayed as Aramco grapples with the challenges of taking a portion of the world’s biggest oil company public.

Currently, there is no international listing planned, but sources said Aramco continues to hope it will list in a foreign financial centre some time next year.

“The Company continues to review options for the listing,” Saudi Aramco said in a statement after the news was first reported by The Wall Street Journal.

“In addition to listing on Tadawul, the home exchange, a range of international options are still being held under active review. The Company will not provide a running commentary on the course of the IPO.”

Sources said the Aramco listing will be much smaller than anticipated in the international market, and that an Asian cornerstone investor is likely to participate.

An international listing of Aramco was seen as the centrepiece of the powerful Crown Prince Mohammed bin Salman’s efforts to reshape the Saudi economy and reduce the nation’s reliance on oil revenues. It was seen valuing Aramco at US$1 trillion to US$2 trillion and raising about US$100 billion to underwrite an expansion of the kingdom’s public investment fund.

A rebound in oil prices following the 2014 collapse of the crude market has somewhat curbed the need for such a large IPO, sources told The Wall Street Journal.

The money that flows from Aramco’s oil wells to state coffers is the linchpin of a social contract between the ruling royal family and average Saudis. Investors long questioned how Aramco would balance that contract with its citizens, who have come to depend on generous social spending, with its responsibility to shareholders post-IPO.

Earlier this year, Saudi Aramco CEO Amin Nasser told CNBC his company was ready to go public , but was waiting for its sole shareholder, the Saudi government, to decide on an international listing venue.

Read the original story at CNBC