Saturday, December 7, 2019

Aramco: IPO Will Come Soon

October 30, 2019

AdobeStock / © Scanrail

The initial public offering (IPO) for state-owned oil company Saudi Aramco will come soon, and will be a decision taken by Saudi Crown Prince Mohammed bin Salman, the kingdom's energy minister said on Wednesday.

Aramco aims to announce the start of its IPO on Nov. 3, three people with direct knowledge of the matter told Reuters on Tuesday, after delaying the deal earlier this month to give advisers time to secure cornerstone investors.

"It is going to come soon ... but it will come at the right time with the right approach and definitely with the right decision," the minister, Prince Abdulaziz bin Salman, said in a speech at the Future Investment Initiative conference in Riyadh.

"And it will be a Saudi decision first and foremost," he said. "Specifically, Prince Mohammed's decision."

The prospect of Aramco selling a piece of itself has had Wall Street on tenterhooks since Prince Mohammed first flagged it three years ago.

Aramco is looking to float a 1% to 2% stake on the kingdom’s Tadawul market, in what would be one of the largest ever public offerings, worth upwards of $20 billion.

U.S. Treasury Secretary Steven Mnuchin said on Tuesday Aramco's IPO would be a "great opportunity" for developing Saudi Arabia's capital markets.

The much-anticipated stock market listing was delayed earlier this month after deal advisers said they needed more time to lock in cornerstone investors, three sources with direct knowledge of the matter told Reuters last week.

Talks have taken place with Abu Dhabi Investment Authority, Singapore’s GIC and other funds, sources have told Reuters.

Anchor, or cornerstone, investors such as sovereign wealth funds are considered key to secure demand. In 2016, state-owned Postal Savings Bank of China sold 77% of its $7.4 billion IPO to such backers.

In Oslo on Wednesday, the chief executive of Norway’s $1.1 trillion sovereign wealth fund, the world's largest, said the fund did not plan to invest in Aramco's IPO.

"Saudi Arabia is not part of our reference index," Yngve Slyngstad told a news conference.

The Norwegian fund has some smaller investments in Saudi companies through an emerging-markets portfolio, but a major company such as Aramco would not be a natural part of this, Slyngstad added.

Russia's sovereign wealth fund will not make a huge investment in Aramco's IPO as it is quite exposed to oil, the head of the Russian Direct Investment Fund, Kirill Dmitriev, told Reuters on Wednesday.

Reporting by Rania El Gamal and David Lawder

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