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Planned IPO Of Saudi Aramco Delayed Till After Earnings Report: Reuters

Planned IPO Of Saudi Aramco Delayed Till After Earnings Report: Reuters
The largest oil exporter of the world Saudi Aramco has decided to postpone its planned launch of a partial initial public offering (IPO) as the company has decided to wait for the return of investor confidence in the company following the pending third-quarter results, claimed a report published by news agency Reuters. 
The market was expecting an official announcement for the IPO by Aramco sometime next week. The state owned and run company had planned to float a 1 per cent  to 2 per cent  stake on the kingdom’s Tadawul which would have been among the largest ever listings and was expected to be valued at more than $20 billion.
However the company now wants investor confidence on the company to return back after half of the company’s production capacity was knocked out temporarily following an attack on its Abqaiq and Khurais plants on September 14. The company is hoping that it would be able to invoke investor confidence in the company after it presents results covering the period, said the report quoting the two sources with knowledge of the matter.
“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” said one of the sources reportedly told Reuters.
Aramco had set no new date for the listing, claimed the report. The report also did not mention anything about when the company would announce the third quarter results.
“The company continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing,” Aramco said in a statement to Reuters.
There were reports at the end of last month about the company possibly delaying its IPO launch indefinitely and would not be held this year at all primarily because of the attacks. The IPO delay was also reported on Thursday by The Financial Times quoting information from sources who said that the listing was delayed by “weeks”.
Since the Saudi Arabia Crown Prince Mohammed bin Salman first indicated the launch of the IPO three years ago, there has been intense interest about the Aramco IPO on the Wall Street. However, some financiers and industry experts have questioned the $2 trillion valuation of Aramco that the company has been demanding. The valuation was questioned because the trend of many countries to slowly shift away from the use of petroleum as a fuel and shifting to greener sources of energy because of concerns about global warming due to emission of green house gases. Such a trend has put oil prices under pressure and had dropped the equity value of oil producers. 
“The official line was that the Q3 results were very good, so they want to update the analysts and market the IPO after the Q3 numbers,” said the Reuters report quoting a second source.
For investors of Saudi Arabia, the opportunity to own Aramco shares is viewed as a chance for owning a part of the crown jewel of the kingdom and exhibit patriotism towards the country.

Christopher J. Mitchell

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