Saudi Aramco says IPO timing depends on ‘market conditions’

Agence France-Presse

This is AI generated summarization, which may have errors. For context, always refer to the full article.

Saudi Aramco says IPO timing depends on ‘market conditions’

AFP

The prospect of the world's most profitable firm falling short of a $2-trillion valuation is widely considered the reason the initial public offering has been delayed

DUBAI, United Arab Emirates – Saudi Aramco said Sunday, October 20, the timing of its long-awaited stock market debut “will depend on market conditions,” after the latest delay in the blockbuster initial public offering (IPO).

The IPO forms the cornerstone of a reform program conceived by the kingdom’s de facto ruler Crown Prince Mohammed bin Salman to wean the Saudi economy off its reliance on oil. (READ: Saudi’s young heir apparent, between reforms and crackdown)

Aramco was expected to launch the first part of a two-stage listing in the coming week, but the energy giant decided to push the trading date back to December or January, a person familiar with the situation told Agence France-Presse (AFP) last Thursday, October 17.

Sources had told AFP in mid-September that the mammoth share offering could be delayed after an attack on Saudi oil facilities knocked out half of the output of the world’s top crude exporter.

“The company continues to engage with the shareholders on IPO readiness activities,” Aramco said in a statement to AFP.

“The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing,” it said without giving further details.

The prospect of the world’s most profitable firm falling short of a $2-trillion valuation sought by Saudi rulers is widely considered the reason the IPO has been delayed.

A prior initiative to list Aramco was postponed last year due to disappointment over the valuation during a weak period for oil prices.

Aramco has envisioned a two-stage listing, with about 2% of the capital trading on the Tadawul exchange in Saudi Arabia and an additional 3% on a foreign exchange. 

With a $2-trillion valuation, the 5% sale could raise some $100 billion, in what would be the largest IPO ever. It would eclipse the 2014 listing of Alibaba which raised $25 billion.

Aramco sits on 263 billion barrels of crude oil and 320 trillion cubic feet of natural gas, much more than any other private or state oil company, and the firm reports impressive earnings.

“But Riyadh’s apparent desire for a valuation of $2 trillion could still be difficult to justify,” said Russ Mould, director at Bell Investment.

The company’s expected dividend yield is well below those offered by most of the world’s major oil firms, Mould said.

The Saudi government has not given any explanation for the IPO delays, but apart from holding out for the big-ticket valuation, it is also said to be concerned the listing could bring intense legal scrutiny of the secretive company’s finances and inner workings. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI

How does this make you feel?

Loading
Download the Rappler App!