New York said to be favoured for Aramco IPO; Toronto also a contender

Saudi Arabia is favouring New York to list state oil giant Saudi Aramco, while also considering London and Toronto for the prospect of floating the firm, The Wall Street Journal reported on Monday.

Saudi officials also talked to exchanges in Singapore, Hong Kong, Tokyo and Shanghai but are unlikely to pursue listing in those places, the newspaper said, citing people familiar with the matter.

The listing is the centrepiece of a Saudi Arabian government plan to transform the kingdom by enticing investment and diversifying the economy away from a reliance on oil. Saudi officials are preparing to float as much as five per cent of Saudi Arabian Oil Co., known as Saudi Aramco. The IPO is expected to value Aramco at a minimum of US$2 trillion.

Saudi officials would prefer the New York Stock Exchange for the IPO, people told the Journal. New York offers the world’s deepest pool of big-time investors and is among the world’s largest centres of financing for energy companies, along with London and Toronto.

Saudi Arabia’s Tadawul is expected to serve as one of multiple exchanges for the listing as part of the country’s efforts to expand its domestic capital markets.

Saudi Deputy Crown Prince Mohammed bin Salman has said the company would go public in 2018. But complications restructuring the company and disentangling its finances from the government could delay the IPO until 2019, the Journal reported last week

While New York and London are financial powerhouses long considered a potential fit for Aramco, Toronto has emerged as a contender following appeals from the city’s financial elite directly to the Saudi Arabian company, the newspaper said. Aramco also would benefit from the vast knowledge of the energy sector among Canada’s biggest pension funds and other institutional investors as energy stocks represent about a 20 per cent weighting on the key S&P/TSX Composite index, the second-largest weighting after the financials group, the person said.