Final hours! Save up to 50% OFF InvestingProCLAIM SALE

Saudi Aramco to Restart Preparations for Mega IPO

Published 2019-07-02, 05:04 a/m
© Reuters.  Saudi Aramco to Restart Preparations for Mega IPO
JPM
-
HSBA
-
MS
-

(Bloomberg) -- Saudi Arabia is restarting preparations for a potential initial public offering of oil giant Aramco, months after putting the planned listing on hold, people familiar with the matter said.

Aramco, the world’s most profitable company, recently held talks with a select group of investment banks to discuss potential roles on the offering, according to the people. Detailed work on the IPO may pick up speed later this year or early next year, the people said, asking not to be identified because the information is private.

The revived IPO plan will still face significant hurdles, including the ability of kingdom to achieve the $2 trillion valuation it’s been seeking for the company. Demand for the share sale would also likely be affected by lower oil prices as well as growing concerns among top institutional investors about pouring money into fossil-fuel companies that contribute to climate change.

Saudi Crown Prince Mohammed bin Salman is also keen to list Aramco in New York, but advisers are wary of opening up the company to the risks of U.S. litigation. Prince Mohammed has insisted that the IPO will still take place in 2020 or 2021.

After working with banks for more than two years, Aramco formally put the IPO plans on hold last year and instead decided to buy a $69 billion stake in local chemical giant Saudi Basic Industries Corp. Aramco is planning to wait until the Sabic acquisition is completed before conducting the IPO, one of the people said.

Aramco was originally working with Evercore Inc., Moelis & Co., HSBC Holdings Plc (LON:HSBA), JPMorgan Chase & Co (NYSE:JPM). and Morgan Stanley (NYSE:MS) on the planned share sale. It wasn’t immediately clear if all the banks had been approached again or if some new firms are also being considered.

No final decisions have been made, and the timeline for the share sale could still change, the people said. Aramco, officially known as Saudi Arabian Oil Co., didn’t immediately respond to requests for comment.

The IPO project was first announced in 2016 as the cornerstone of the Vision 2030 plan to modernize the Saudi economy, with a target of listing in the second half of 2018. The kingdom wants to raise a record $100 billion from selling a 5% stake in Aramco, which would make it the biggest IPO in history and a windfall for any banks that win a role.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.