Saudi Aramco’s 2018 IPO schedule wavers
This comes as Saudis assess markets
DAVOS: Saudi Arabia’s oil minister said the initial public offering of oil giant Aramco will take place “when the time is right,” revealing the first crack in the kingdom’s earlier plan to debut the company this year.
“We hope that 2018 will be the right time but ultimately we have to make sure the market is ready,” Khalid Al-Falih said in Davos, Switzerland, on Wednesday when asked if he was pointing to a delay.
“We’re ready for the listing but we have to be sure the market is ready, that the time is right, and we will calibrate that as we get closer,” he told reporters at the World Economic Forum in Davos.
The comments were the first wobble in Riyadh’s long-standing assurances that the IPO was “on track and on time” for the second half of 2018. Al-Falih declined to answer questions about whether the IPO could be postponed to 2019.
The Saudi Arabian Oil Co offering would be one of the biggest events in financial markets this year and any alteration is of significant interest to global investors.
Saudi officials said they hope to raise a record US$100bil, valuing the company at more than US$2 trillion and dwarfing the US$25bil raised by Chinese Internet retailer Alibaba Group Holding Ltd in 2014.
The IPO is the brainchild of Crown Prince Mohammed Bin Salman as the cornerstone of his Vision 2030 programme to reform the country’s oil-dependent economy.
Privately, Aramco executives and advisers said that if the government gives the green light soon, a listing during the second half of this year in Riyadh is possible, but that additional listings in London or New York would be very difficult. Earlier, Aramco chief executive officer Amin Nasser drew a distinction between preparatory work for a 2018 IPO, which he said was complete, and the decision to go ahead with the actual sale, which is in the hands of the royal court.
He also said the kingdom’s rulers have yet to decide on the location for a second listing outside Riyadh. “We are currently waiting for the decision from the shareholder,” Nasser said, referencing the government during a Bloomberg Television interview in Davos.
The international IPO is proving difficult for several reasons. First, Prince Mohammed has said publicly Aramco should be valued at US$2 trillion or more, a figure few outside the kingdom see as realistic.
Saudi authorities are also struggling to reconcile their desire for the biggest possible pool of capital, probably to be found in New York or London, with their preference for less-stringent regulation, which would point to Hong Kong. Asked whether the IPO could be postponed to 2019, Nasser said:
“We don’t know. It’s all depending on how soon we hear about the second venue. But currently, we’re ready for the second half of 2018.”