Aramco public listing on track for 2018

15 October 2017
Saudi Aramco says reports that it has shelved its plans to float up to 5 per cent of its business in 2018 are 'speculative'

Saudi Arabia's national oil company Saudi Aramco says its plans to launch a public offering of shares in 2018 remain on track.

The statement follows media reports that the company was considering shelving plans for an initial public offering (IPO) in favour of a private placement of shares.

In a statement on 15 October, the state-owned company said reports that that it had shelved plans for a dual listing of up to 5 per cent of its shares on Saudi Arabia's Tadawul stock exchange and on an international stock market were 'speculative'.

Entirely speculative

The London-based Financial Times reported on 13 October that Aramco was considering plans for a private share sale with sovereign wealth funds and international investors instead of an IPO.

The report said that talks about a private share sale have been held with foreign governments –  including China – in recent weeks.

Aramco dismissed talk of shelving the flotation as "entirely speculative".

https://twitter.com/Saudi_Aramco/status/919248629835157504

The company said on Twitter: "All listing venues under review for optimal decision, IPO process is on track for 2018."

A company spokesman said: "A range of options for the public listing of Saudi Aramco, continues to be held under active review... No decision has been made and the IPO process remains on track."

International sale

On 5 October, Saudi Arabia’s Energy Minister Khalid Al Falih, speaking at an energy forum in Moscow, said that Aramco will have its IPO in the second half of 2018.

Saudi Aramco has yet to select an international venue for the proposed IPO that was first announced in January 2016.

New York and London are understood to be the two favoured markets on which to list, in addition to the Tadawul.

The IPO of up to 5 per cent of Saudi Aramco is an integral part of the kingdom’s Vision 2030 economic reform programme and National Transformation Plan (NTP).

If Riyadh’s suggested $2 trillion valuation of Aramco is met, the IPO would raise up to $100bn for the kingdom’s sovereign wealth fund Public Investment Fund (PIF).

In early September, there were reports that contingency plans were being prepared for a possible delay to the planned listing.

Those reports said that while the government was still planning to proceed with the IPO in the second half of 2018, it was also working on contingency plans in case the part-listing is delayed into early 2019.

Opening up

A share listing would open the company to greater international regulation and scrutiny.

In the UK, MPs have expressed concern that regulators are prepared to water down corporate governance rules in order to accommodate the huge Aramco flotation.

London's listing rules state that more than 25 per cent of a company's shares should be listed in order to stop a single shareholder wielding too much influence.

But Aramco plans to sell just 5 per cent of the company, raising concerns in London about having to bend the rules.

New York is another possible listing destination, but the FT said some members of the Saudi royal family are worried about legal risks, citing US terrorism legislation that would allow citizens to sue Saudi Arabia.

 

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