Aramco Sales - Shelved

Saudi Arabia, which planned to raise billions from an Aramco IPO, has called off plans to float domestically and internationally state oil giant Aramco. 

Citing senior industry sources, Reuters said yesterday advisers working on the proposed listing, scheduled for this year, have been disbanded. The plan to float around 5% of Aramco was part of Crown Prince Mohammed bin Salman’s major reforms to reduce the kingdom’s dependence on oil, of which it is the world’s top exporter. Vision 2030, approved in April 2016, includes privatising part of Aramco and creating a US$2 trillion (RM8.2 trillion) sovereign wealth fund.

“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,” Reuters quoted a Saudi source as saying.

Aramco executives have repeatedly cited unfavourable market conditions to push back the initial public offering, with many observers sceptical whether the IPO will happen at all.

The oil giant is now looking at Plan B to raise billions of dollars.

Aramco chief executive Amin Nasser confirmed in July preliminary talks to acquire a “strategic stake” in SABIC, the world’s fourth largest petrochemicals company that is 70% owned by the government-run Public Investment Fund (PIF), reports AFP.

“A potential SABIC deal would affect the time frame for Aramco’s IPO,” Nasser told Al-Arabiya television, without elaborating.

Observers see the acquisition of a controlling stake from PIF as a complex alternative to raise much-needed cash for the kingdom’s top sovereign wealth fund.

SABIC, the largest publicly listed company, has a market capitalisation of around US$100 billion – the same amount the kingdom had sought to raise from Aramco’s IPO.

Stock exchanges in London, New York and Hong Kong had been vying to host the international floatation of Aramco.

“The message we have been given is that the IPO has been called off for the foreseeable future,” a senior financial adviser told Reuters.

“Even the local float on the Tadawul Stock Exchange has been shelved,” the source added.