ABU DHABI, Sept 11, 2019 (BSS/AFP) – Saudi energy giant Aramco is ready
for a two-stage stock market debut including an international listing “very
soon” but the timing is up to the government, its CEO said Tuesday.
Aramco has said it plans to float around five percent of the state-owned
company in 2020 or 2021 in what could potentially be the world’s biggest
stock sale.
The mammoth initial public offering (IPO) forms the cornerstone of a
reform programme envisaged by the kingdom’s de facto ruler Crown Prince
Mohammed bin Salman, a son of King Salman, to wean the Saudi economy off its
reliance on oil.
It aims to raise up to $100 billion based on a $2 trillion valuation of
the company, but investors have debated whether Aramco is worth that much and
there have been repeated delays in the launch originally envisaged for 2018.
“We have always said that Aramco is ready for listing whenever the
shareholders make a decision to list,” CEO Amin Nasser told reporters on the
sidelines of the World Energy Congress in Abu Dhabi.
“And as you heard from His Royal Highness Prince Abdulaziz yesterday, it
is going to be very soon. So we are ready — that is the bottom line,” he
said, referring to the newly appointed energy minister.
In New York, sources told AFP that US giant JPMorgan Chase had been tapped
as the investment bank to lead Aramco’s IPO.
The oil giant notified the US bank of its selection on Tuesday, the
sources said.
Aramco has also chosen Goldman Sachs to work on the offering and other
banks are expected to be added at a later date, sources said.
– International listing –
The Saudi government has not given any explanation for the delays in the
listing, but apart from holding out for the big-ticket valuation, they are
also said to be concerned the IPO could bring intense legal scrutiny of the
secretive company’s finances and inner workings.
Exchanges in New York and Hong Kong are heavily lobbying the Saudi group
for the listing, the New York sources said, adding that Tokyo is not in the
running.
“One of the primary listings is going to be local but we are also ready
for listing outside,” Nasser confirmed.
Prince Abdulaziz bin Salman, another son of the king, was promoted Sunday
to the pivotal role of energy minister, replacing veteran official Khalid al-
Falih, as the top crude exporter accelerates preparations for the much-
anticipated IPO.
In his first comments since taking up the role, the minister on Monday
endorsed oil supply cuts, saying in Abu Dhabi they would benefit all
producing nations amid an oversupplied market and sagging prices.
Crude prices are currently moving around levels of $60 a barrel, compared
with more than $75 a year ago, but were given a boost Monday by the comments.
– Prices in decline –
The OPEC petroleum exporters’ cartel and key independent producers are
deliberating how to halt a slide in prices that has persisted despite
previous cuts and US sanctions that have squeezed supply from Iran and
Venezuela.
Abu Dhabi is also hosting this week a meeting of the Joint Ministerial
Monitoring Committee (JMMC) of the OPEC+ alliance for a supply cut deal
reached last year.
The ministers will consider fresh reductions, even though analysts are
doubtful such a move would succeed in bolstering crude prices, which have
been badly dented by the US-China trade war.
The Aramco listing is key to Saudi Arabia’s economic future. Its GDP grew
by 2.4 percent last year but the International Monetary Fund said growth
would fall to 1.9 percent in 2019 due to substantial oil output cuts.
The IMF said Monday that fiscal reforms, including a consumption tax and
higher energy prices, have started to yield results but that more is needed
to plug a chronic budget deficit.
The prospect of falling short of the $2 trillion valuation desired by
Saudi rulers is widely considered the reason the IPO has been delayed.
Earlier this month, Aramco said its first half net income for 2019 slipped
nearly 12 percent to $46.9 billion on lower crude prices.
It was the first time the company has published half-year financial
results and comes after Aramco opened its accounts for the first time in
April, revealing itself to be the world’s most profitable company.