Saudi Aramco IPO delay likely

The world’s biggest ever flotation is expected to be postponed until 2019, according to reports.

Saudi Arabia had been planning to sell off 5% of its state oil company Saudi Aramco in a deal that would make it the largest oil company by market capitalisation. However, uncertainty over whether Saudi Aramco should seek an international as well as domestic listing has put the prospect of a 2018 flotation in doubt.

“The only thing we know today is that Tadawul will be the key listing location as our national exchange,” Saudi energy minister Khalid al-Falih told US news channel CNN. There are concerns that a listing in the US might leave the company liable to future litigation such as the current lawsuits against oil companies for their role in climate change.

London and Hong Kong are also bidding for the share sale but another complication is the possibility that Saudi Arabia is granted emerging market status by index provider MSCI, a development that would require any passive investment funds following an MSCI index to allocate more investment into Saudi shares.

In addition to the indecision over where to list, there are also doubts as to whether advisers will achieve the $2 trillion valuation demanded by crown prince Mohamed bin Salman, reports the Financial Times.

The crown prince will be the one that makes the final decision on the IPO, reports Reuters, however that decision would need to be taken in April for the IPO to go ahead this year given that it would take an exchange a minimum of six months to prepare for a listing of this magnitude.

©2018 funds global mena

Related Articles