Saudi Aramco eyes local IPO, may spike overseas listing

Saudi Aramco eyes local IPO, may spike overseas listing

Saudi Arabia is scaling back its ambitions for a public offering for oil giant Aramco, moving ahead with a listing next year solely on the Saudi stock exchange, government officials and others close to the process say.

They are taking more time to decide if an international venue is worth it, The Wall Street Journal writes.

According to its sources, the decision has come in part because of concerns about legal risks and also because the need for a bigger listing has been negated by rising oil prices.

Aramco’s listing was expected to raise as much as $100 billion on an international arena like New York - a move that also got the support of President Donald Trump, who publicly called for Aramco to list in the US.

Crown Prince Mohammed bin Salman, in turn, has become resigned to the idea that the legal risks of a US listing could be insurmountable, according to Saudi officials and people close to the process. They said that the prince is set to meet with Trump and American business leaders during a trip to the US beginning Monday, but isn’t expected to make an announcement about the IPO during his trip.

Saudi officials added that an international IPO for Aramco has become much more complicated than they initially believed. 

A listing on the Saudi bourse (Tadawul) gives the government a chance to follow through on Prince Mohammed’s promise to publicly list the company without the litigation and disclosure risks that are likely to crop up on larger exchanges such as New York, London or Hong Kong.

In recent weeks, Saudi officials have publicly made a nationalist case for a Tadawul listing, saying it would boost the local market and allow regular Saudis to have a stake in the nation’s crown jewel.

Even a Tadawul listing could present problems for Aramco and the exchange itself, as it is a small venue and it is unclear whether the internal controls and technology could support large-scale trading that would come with listing a company as big as Aramco. The domestic listing is unlikely to happen by October, a deadline Saudi officials set last year. Officials and people close to the process say April 2019 is likely the soonest a local IPO could go ahead.

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