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Saudi Arabia Minister Reiterates IPO Of Aramco’s Aramco's $2tn Flotation

Saudi Arabia Minister Reiterates IPO Of Aramco’s Aramco's $2tn Flotation
Reports suggesting that Saudi Arabia had shelved its plan to sell some stocks of the state owned oil giant Aramco were denied by the country and reiterated that it would go forward with the public offering of $2tn stake sale to the public.
There was a report on Wednesday in Reuters that Saudi Arabia had disbanded a group of financial advisors working out the plan for sale of 5% stake of the Saudi oil giant because the country now wanted to focus on the acquisition of a portion of a local petrochemicals maker.
However, the reiteration of the plans of the kingdom for the floatation of Aramco’s stake was made by the country’s energy minister even though he did not offer a time line for the sale.
“The government remains committed to the IPO [initial public offering] of Saudi Aramco at a time of its own choosing when conditions are optimum,” said Khalid al-Falih, who is also chairman of Saudi Aramco.
He added: “This timing will depend on multiple factors, including favourable market conditions, and a downstream acquisition, which the company will pursue in the next few months, as directed by its board of directors.”
The Reuters report was based on an unnamed Saudi source familiar with the IPO plans.
“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,” the source had reportedly said.
London, New York and Hong Kong are among the major stock exchanges that are hoping to host the largest ever public offering. Earlier this year, listing rules were altered by London Stock Exchange to suit the floatation of IPO there by Aramco which drew criticism from experts.
The potential valuation of Aramco is also something that is being debated. The prediction by Saudi officials of the valuation of the company was pegged at about $2tn at the time when the Crown Prince of the kingdom Mohammed bin Salman had first made the announced the plans in 2016 to sell 5% of Aramco through a dual listing on the Saudi stock market and an international exchange.
There have been questions raised by many industry experts about the very high valuation of the company and its realistic value and it is believe\d that it is this lack of agreement on the valuation which has created difficulties in devising an IPO plan by advisors.
There has been ealrie4r occasions that Saudi Arabia had been forced to deny reports about dismissing of plans for the IPO floatation. Aramco had said in October 2017 that the IPO floatation was on track for 2018.
In May this year, Al-Falih had said that it was “most likely it will be in 2019”.
But no detail of any possible timing of the listing was given by the oil minister in Thursday’s statement. The minister also said that a number of steps for the listing had bene taken by the government and the company.
“This is all positive progress on what is a complex process, preparing the company and the kingdom for what will ultimately be a global landmark market offering of unprecedented quality and scale,” he said.

Christopher J. Mitchell

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