Saudi Arabia insists ‘committed’ to Aramco IPO
The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum. Khalid al-Falih, Saudi Arabia energy minister
RIYADH: Saudi Arabia, yesterday, rejected reports that Aramco’s planned initial public offering (IPO) had been scrapped, saying the kingdom had stepped up preparations for the stock market debut of the state energy giant.
“The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum,” energy minister Khalid al-Falih said in a statement.
The plan to float around five per cent of Aramco – expected to be the world’s largest stock sale – forms the cornerstone of a reform programme envisaged by Crown Prince Mohammed bin Salman to wean the economy off its reliance on oil.
But Aramco executives have repeatedly cited unfavourable market conditions to push back the IPO, earlier scheduled for this year, with many observers sceptical whether the listing will happen at all.
Fresh speculation about the listing swirled late Wednesday after a media report that the kingdom had halted the plan and financial advisors working on it had been disbanded.
London, New York and Hong Kong have all vied for a slice of the much-touted IPO.
But experts say Aramco’s inability to generate a US$2 trillion valuation sought by the crown prince and legal concerns that the IPO will invite unprecedented scrutiny to the company have prompted indecision and delays.
Falih, however, insisted that the kingdom had boosted preparations for the listing.
“The gove rnment has undertaken a number of major preparatory measures including issuing a new income tax law as it relates to hydrocarbons activities, reissuing a long-term exclusive concession, and appointing a new board of directors,” Falih said.
Falih refused to specify a possible timing for the IPO, reiterating that it depended on factors such as “favourable market conditions and a downstream acquisition which the company will pursue in the next few months”.
He did not elaborate on the acquisition but Aramco chief executive Amin Nasser last month confirmed preliminary talks to acquire a “strategic stake” in SABIC, the world’s fourth largest petrochemicals company that is 70 per cent owned by the government-run Public Investment Fund (PIF).
Nasser had acknowledged in an interview to Al-Arabiya television that a potential SABIC deal would “affect the time frame for Aramco’s initial public offering”. — AFP