Saudi Arabia shelves Aramco IPO: report

Saudi Arabia shelves Aramco IPO: report
The proposed Aramco IPO was the centerpiece of Crown Prince Mohammed bin Salman's "Vision 2030" reform programme, which aims to wean the economy off its reliance on oil revenues.
3 min read
22 August, 2018
The sale of 5 percent of Saudi Aramco has reportedly been called off [Getty]
Saudi Arabia has reportedly halted its plan to sell shares in state oil giant Aramco, a major U-turn for Crown Prince Mohammed bin Salman's ambitious reform drive.

The financial advisors working on the proposed IPO listing have been disbanded, according to Reuters sources, effectively ending the plan for an initial public offering on both domestic and international markets.

New York, Hong Kong and London had competed fiercely to host the listing, described as the largest flotation ever.

US President Donald Trump had personally lobbied the Saudi Royal Court to list the company on the New York Stock Exchange.

Instead, the kingdom is shifting its attention to a proposed acquisition of a "strategic stake" in local petrochemicals maker Saudi Basic Industries Corp, two senior industry sources told the news agency on Wednesday.

"The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way - first delay then calling off," a Saudi source familiar with the IPO plans said.

The public offering of around 5 percent of the world's largest oil producer, announced in 2016, is the centerpiece of Crown Prince Mohammed bin Salman's "Vision 2030" reform programme, which aims to wean the economy off its reliance on oil revenues.

Saudi Arabia, which counted on crude for more than 90 percent of its public revenues, has struggled to bounce back from a 2014 oil market crash triggered by a global oil glut.

It predicted the sale would value the company at $2 trillion - more than double the current market valuation of Apple - though oil and finance analysts have been skeptical the kingdom would achieve its ambitious target.

Bankers and lawyers were lining up to land advisory roles in the IPO, drafting a prospectus - an official document providing details of the company - and expecting the Aramco deal to be a gateway to a raft of other opportunities from Saudi Arabia's privatisation programme.

"The message we have been given is that the IPO has been called off for the foreseeable future," one of the sources, a senior financial advisor, told Reuters.

"Even the local float on the Tadawul Stock Exchange has been shelved," the source added.

Payments to advisors were accounted for in Aramco's budget until the end of June and have not been renewed, Reuters reported.

Saudi Aramco has not responded to requests for comment, and Saudi authorities have not commented during a week-long holiday in the Islamic kingdom.

Sources have previously told Reuters there were disagreements among Saudi officials on which international market to choose.

Saudi Arabia's finance minister Mohammed al-Jadaan said in April the government had not yet decided whether to list Aramco on the Saudi exchange alone, on a stock market abroad or seek a dual listing.

Meanwhile Aramco's CEO Amin Nasser said in March that his company was on track for a 2018 listing, and that the choice of date and venue was a decision for the company's owner, the Saudi government.