SABIC DEAL MAY DELAY ARAMCO IPO TIMELINE
CEO hints that listing plan may be further pushed to next year
SAUDI Arabian Oil Co (Aramco) signalled another potential delay for the world’s largest initial public offering (IPO) after it started talks last week to buy a stake in a local petrochemical company.
The state-owned oil company said it might buy a strategic stake in Saudi Basic Industries Corp (Sabic) from the country’s sovereign wealth fund. Sabic carries a market value of little more than US$100 billion (RM407 billion) and the sovereign wealth fund controls a 70 per cent stake.
Amin Nasser, Aramco’s chief executive officer, said the company was still in the early stages of talks and a deal wasn’t certain. “A potential Sabic deal would affect the time frame for Saudi Aramco’s IPO,” said Amin.
A stake in a chemical company like Sabic made Aramco less vulnerable to volatile oil prices, and would be positive for its revenue, said Amin.
The remarks raise the spectre of further delay for an IPO that could raise as much as US$100 billion.
Saudi Energy Minister Khalid al-Falih said last month while “it would be nice if we can do it in 2019, there is a lot more at stake than just ticking a box and say, ‘We got this out of the way’ ”.
The plan to sell shares in the state oil giant next year is itself a delay from an original plan for this year. For almost two years, Saudi officials said repeatedly the IPO was “on track, on time” for the second half of this year. Earlier this year, they admitted it would be delayed into next year. In May, Al-Falih said the sale would “most likely” happen next year.
In June, though, the minister hinted at a fresh delay, saying only that it would be nice to sell shares next year. And many observers — including members of the company’s senior leadership — doubt whether it will happen at all.
The Aramco IPO would be a seismic event for financial markets.