Aramco IPO likely to be postponed to 2019
The government earlier said the valuation may reach $2tr
Saudi Arabia is preparing contingency plans for a possible delay to the initial public offering of its stateowned oil company by a few months into 2019, according to people familiar with the matter.
While the government is still aiming for a Saudi Aramco IPO in the second half of next year, that timetable is increasingly tight for what’s likely to be the biggest share sale in history, the people said, asking not to be named discussing internal deliberations.
Saudi Aramco said in statement the IPO “remains on track. The IPO process is well underway and Saudi Aramco remains focused on ensuring that all IPO related work is completed to the very highest standards on time.” It didn’t give a time frame. The comment was echoed by a Saudi government source Wednesday. Officials have previously said the most likely schedule is the second half of next year.
Several important decisions on the IPO have yet to be taken, stretching the ability of the company and its advisers to sell shares before the end of next year.
For example, Saudi Arabia has yet to announce where it will sell shares in Aramco other than the domestic stock exchange in Riyadh. The country may not make an announcement until late October, when it’s holding a big investment conference in Riyadh. The delay in selecting a foreign exchange, mostly likely London or New York, has had a knock-on effect on other preparatory work.
Aramco valuation
Saudi Arabia is also contending with weaker oil prices, which will help determine the value of Saudi Arabian Oil Co., as Aramco is formally known. The government has previously said the valuation may reach $2 trillion (Dh7.34 trillion), while analysts, including those at Sanford C. Bernstein & Co. and Rystad Energy, have tended to give lower estimates.
Riyadh built a coalition between Opec and other oil producers last year to reduce supply and bolster prices that by then had already retreated for two consecutive years. The oil glut has yet to dissipate and analyst forecasts compiled by Bloomberg show prices won’t average $60 again until 2019. Brent crude yesterday was trading down 0.2 per cent at $55.03 a barrel as of 1:36pm in Singapore.
Should Saudi Arabia achieve its valuation of $2 trillion, the 5 per cent stake it plans to sell would raise about $100 billion. That would eclipse the $25 billion raised by Alibaba Group Holding Ltd. in 2014, the current record.
Aramco Chief Executive Officer Amin Nasser said in January that the IPO was most likely to take place in the second half of 2018. Previously, Saudi officials said a flotation was planned for some point in 2018.