Saudi Arabia calls off Aramco IPO and disbands advisers

[The SC]

Saudi Arabia calls off Aramco IPO and disbands advisers, Reuters reports

Saudi Arabia has scrapped its plans to list shares of state-owned energy giant Aramco on stock exchanges, Reuters reports.

However, the kingdom's powerful crown prince still wants to take Aramco public at some point in the future, sources familiar with the process told CNBC's David Faber. The IPO is now less urgent because oil prices have rebounded above $70 a barrel, relieving pressure on Saudi finances, the sources said.

The initial public offering was poised to be the largest ever and was at the center of Crown Prince Mohammed bin Salman's ambitious plan to overhaul the Saudi economy. The Saudis had hoped to attract a $2 trillion valuation for Aramco, the world's largest oil company, though some outside analysts have pegged its value at half that amount.

Doubt has been swirling around the IPO for months as the kingdom deferred making decisions on key parts of the stock market debut, including where to list shares overseas. Skepticism only grew deeper earlier this year when sources familiar with the process said Aramco would first list on its domestic exchange, the Tadawul, and put off an international listing.

Now, the kingdom will no longer seek to publicly list shares at home or abroad and Saudi Aramco has dismissed advisers working on the deal, several sources told Reuters. One source said the decision to cancel the IPO had been made "some time ago."


Aramco is now focusing on acquiring a stake in Saudi Basic Industries, or SABIC, a domestic petrochemical company, source told CNBC. That in part explains why advisers on the Aramco deal have been sidelined, the sources said.

Saudi Aramco declined to comment.

If Saudi Aramco confirms the report, it would mark the end of more than 2½ years of intense market speculation, competition among exchanges and jockeying among banks for a role in the lucrative offering.

Crown Prince Mohammed first made the plans public in January 2016, when he was still the kingdom's deputy crown prince.

The plan emerged during the depths of a crushing oil price downturn that sent crude futures from more than $100 a barrel to less than $30. The rout pushed Saudi Arabia's budget into a deficit and ultimately forced the kingdom to coordinate production cuts among about two dozen oil-producing nations.

Saudi Arabia hoped to raise about $100 billion by offering the public the opportunity to own a small portion of Aramco. The kingdom planned to use the funds to expand its sovereign wealth fund, the Public Investment Fund, and underwrite the crown prince's Vision 2030, a blueprint to diversify the nation's economy.

Stock exchanges in New York, London and Hong Kong emerged as leading contenders to list Aramco shares. The crown prince reportedly favored listing on the New York Stock Exchange, but market watchers questioned whether Aramco, known for its secrecy, could meet the NYSE's stringent transparency standards.

Amin Nasser, CEO of Aramco, told CNBC earlier this year that his company was prepared for a public offering in the second half of 2018, but was waiting for the government to choose an exchange. Indecision over the listing venue snarled the process, the Wall Street Journal reported earlier this year.

Aramco in July confirmed media reports that it had entered talks with the Public Investment Fund, to acquire a "strategic stake" in SABIC, the Saudi petrochemical company. The fund has a 70 percent stake in SABIC.

Aramco said the move would be consistent with Aramco's strategy of diversifying into high value businesses, including refining crude oil into fuels and processing byproducts into petrochemicals like plastics. Aramco currently focuses on producing crude oil from that nation's vast reserves.

The deal would also allow the Public Investment Fund to generate cash from its investment in SABIC.


https://www.cnbc.com/2018/08/22/sau...po-and-disbands-advisers-reuters-reports.html

 

[Yongpeng Sun-Tastaufen]

If they do IPO Saudi Arabia's oil would be owned by foreign investors and they don't want that.

 

[That Guy]

If they do IPO Saudi Arabia's oil would be owned by foreign investors and they don't want that.

As always, your opinion is factually incorrect.

The Saudis were only offering a few percent, not the entire company.

 

[The SC]

As always, your opinion is factually incorrect.

The Saudis were only offering a few percent, not the entire company.

5% to be exact.. and this is just a posponing of the offer..it might be for a long time though..

 

[FalconStar]

As always, your opinion is factually incorrect.

The Saudis were only offering a few percent, not the entire company.

That 5% would have been worth a $100 Billion.
To list on a stock exchange like London or New York you have to make almost everything about the company public,
which would have exposed the inner workings of the company. This could have eventually damaged the reputation of the company as I'm sure KSA didn't run the company very stringently, which would have lead to devaluation in company stock if listed and damaged the Saudi brand.
Also whenever KSA would have been in trouble like their recent spat with Canada would have lead to a sharp decline in stock price.
This company is backbone of Saudi economy and all this scrutiny of company finances and fluctuating stock price would have turned into a National security threat to the Saudi State.

 

[cloud4000]

Aramco is so enmeshed with the Saudi government and Saudi royal family that it's been difficult to separate them in time for the IPO. Lots of vested interests and politics involved.

It will happen just not now.

 

[Hiraa]

As always, your opinion is factually incorrect.

The Saudis were only offering a few percent, not the entire company.

I heard 2-5% only.

 

[Hiraa]

Btw

https://twitter.com/x/status/1032448606471704578

 

[The SC]

Still on ..but postponed..

 

[Hakikat ve Hikmet]

Looks like a counter measure against MBS!!!!!

 

[The SC]

That 5% would have been worth a $100 Billion.
To list on a stock exchange like London or New York you have to make almost everything about the company public,
which would have exposed the inner workings of the company. This could have eventually damaged the reputation of the company as I'm sure KSA didn't run the company very stringently, which would have lead to devaluation in company stock if listed and damaged the Saudi brand.
Also whenever KSA would have been in trouble like their recent spat with Canada would have lead to a sharp decline in stock price.
This company is backbone of Saudi economy and all this scrutiny of company finances and fluctuating stock price would have turned into a National security threat to the Saudi State.

KSA would have not announced it if it did not have enough transparency to show to the investors..then one should think that KSA already got more than that $100 billion from its anti-corruption campaign....as well as too much pressure from Trump to do the IPO in NY ..KSA might do it..but in exchange for something very important..like the nuclear enrichment technologies or something as important.. There is also the factor of timing..KSA would want the optimum value fo the shares..and the Oil market seem to be too volatile at the present time.. so much factors and variables to consider!

 

[FalconStar]

KSA would have not announced it if it did not have enough transparency to show to the investors

They were hoping for a lenient check by the value of their company and the market in which it would have been offered would have gained tremendously from it, but they were not successful in getting that kind of deal.

then one should think that KSA already got more than that $100 billion from its anti-corruption campaign....as well as too much pressure from Trump to do the IPO in NY ..KSA might do it..but in exchange for something very important..like the nuclear enrichment technologies or something as important.. There is also the factor of timing..KSA would want the optimum value fo the shares..and the Oil market seem to be too volatile at the present time.. so much factors and variables to consider!

They are only saying the deal is not off cause they don't know yet where the oil price would settle, once the oil price stabilizes and it might even go up after November when Iran sanctions kick in. Then they might officially announce the end of IPO.

 

[The SC]

Saudi Arabia Denies Cancellation of Aramco IPO

Thursday, 23 August, 2018 - 07:00



Minister of Energy, Industry and Mineral Resources Khalid al-Falih has dismissed speculation surrounding the cancellation of Saudi Aramco’s IPO as not true.

“The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum. This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition, which the company will pursue in the next few months, as directed by its board of directors,” Falih said in a statement.

He insisted that the kingdom had boosted preparations for the listing.

“The government has undertaken a number of major preparatory measures including issuing a new income tax law as it relates to hydrocarbons activities, reissuing a long-term exclusive concession, and appointing a new board of directors,” he said.

He added that Aramco has completed its internal program for IPO preparedness.

“It has amended its bylaws, converted to a joint stock company, ensured that its internal segmental financial reporting aligns with potential listing venue requirements, established an investor relations function, and undertaken the first independent certification of its hydrocarbon reserves, all confirming the company’s peerless status in the industry.”

Falih hailed all the measures as “positive progress on what is a complex process,” preparing Aramco and Saudi Arabia for what will ultimately be a global landmark market offering of unprecedented quality and scale.

https://aawsat.com/english/home/article/1371086/saudi-arabia-denies-cancellation-aramco-ipo

 

[Saif al-Arab]

Saudi Arabia calls off Aramco IPO and disbands advisers, Reuters reports

Saudi Arabia has scrapped its plans to list shares of state-owned energy giant Aramco on stock exchanges, Reuters reports.

However, the kingdom's powerful crown prince still wants to take Aramco public at some point in the future, sources familiar with the process told CNBC's David Faber. The IPO is now less urgent because oil prices have rebounded above $70 a barrel, relieving pressure on Saudi finances, the sources said.

The initial public offering was poised to be the largest ever and was at the center of Crown Prince Mohammed bin Salman's ambitious plan to overhaul the Saudi economy. The Saudis had hoped to attract a $2 trillion valuation for Aramco, the world's largest oil company, though some outside analysts have pegged its value at half that amount.

Doubt has been swirling around the IPO for months as the kingdom deferred making decisions on key parts of the stock market debut, including where to list shares overseas. Skepticism only grew deeper earlier this year when sources familiar with the process said Aramco would first list on its domestic exchange, the Tadawul, and put off an international listing.

Now, the kingdom will no longer seek to publicly list shares at home or abroad and Saudi Aramco has dismissed advisers working on the deal, several sources told Reuters. One source said the decision to cancel the IPO had been made "some time ago."


Aramco is now focusing on acquiring a stake in Saudi Basic Industries, or SABIC, a domestic petrochemical company, source told CNBC. That in part explains why advisers on the Aramco deal have been sidelined, the sources said.

Saudi Aramco declined to comment.

If Saudi Aramco confirms the report, it would mark the end of more than 2½ years of intense market speculation, competition among exchanges and jockeying among banks for a role in the lucrative offering.

Crown Prince Mohammed first made the plans public in January 2016, when he was still the kingdom's deputy crown prince.

The plan emerged during the depths of a crushing oil price downturn that sent crude futures from more than $100 a barrel to less than $30. The rout pushed Saudi Arabia's budget into a deficit and ultimately forced the kingdom to coordinate production cuts among about two dozen oil-producing nations.

Saudi Arabia hoped to raise about $100 billion by offering the public the opportunity to own a small portion of Aramco. The kingdom planned to use the funds to expand its sovereign wealth fund, the Public Investment Fund, and underwrite the crown prince's Vision 2030, a blueprint to diversify the nation's economy.

Stock exchanges in New York, London and Hong Kong emerged as leading contenders to list Aramco shares. The crown prince reportedly favored listing on the New York Stock Exchange, but market watchers questioned whether Aramco, known for its secrecy, could meet the NYSE's stringent transparency standards.

Amin Nasser, CEO of Aramco, told CNBC earlier this year that his company was prepared for a public offering in the second half of 2018, but was waiting for the government to choose an exchange. Indecision over the listing venue snarled the process, the Wall Street Journal reported earlier this year.

Aramco in July confirmed media reports that it had entered talks with the Public Investment Fund, to acquire a "strategic stake" in SABIC, the Saudi petrochemical company. The fund has a 70 percent stake in SABIC.

Aramco said the move would be consistent with Aramco's strategy of diversifying into high value businesses, including refining crude oil into fuels and processing byproducts into petrochemicals like plastics. Aramco currently focuses on producing crude oil from that nation's vast reserves.

The deal would also allow the Public Investment Fund to generate cash from its investment in SABIC.


https://www.cnbc.com/2018/08/22/sau...po-and-disbands-advisers-reuters-reports.html

I honestly don't see the point of selling off even 5% of Saudi Aramco.

The economy is growing, in particular the non-oil/gas sector is growing (on average 10 times as much as the economy itself in the past 10 years), the sovereign wealth fund (3rd or second largest in the world, can't remember) is growing each month with billions of dollars once again (been the case for 1+ year) and economic reforms have been overall quite if not very successful considering the timespan and initial challenges.

Reflected in KSA's stock market (largest in the region, Arab and Muslim world) being upgraded to an emerging-market status and foreign investments pouring in.

https://www.bloomberg.com/news/arti...oveted-emerging-market-status-in-msci-upgrade

I would continue the economic reforms, increase productivity, continue to improve the emerging private sector, maybe most importantly increase the percentage of the woman workforce, and continue the wise investments across the world (most recently Tesla). Aside from investing in renewable and nuclear energy as planed as well on a massive scale.

If that IPO ever sees the light (quite possible), I hope the money will be invested inside KSA as there is so much potential. Groundbreaking projects such as NEOM and that gigantic solar project (200 times larger than the current biggest solar power plant in the world) should get the priority full stop.

EDIT: As usual Western media and their imaginary "insiders" inside KSA were wrong once again. It's becoming quite absurd. Maybe they are angry that their usual punching bag (when it comes to exaggerated and absurd news) is slowly disappearing and that they need to use the remaining or future ones instead? Too bad.

 

[Clutch]

I honestly don't see the point of selling off even 5% of Saudi Aramco.

The economy is growing, in particular the non-oil/gas sector is growing (on average 10 times as much as the economy itself in the past 10 years), the sovereign wealth fund (3rd or second largest in the world, can't remember) is growing each month with billions of dollars once again (been the case for 1+ year) and economic reforms have been overall quite if not very successful considering the timespan and initial challenges.

Reflected in KSA's stock market (largest in the region, Arab and Muslim world) being upgraded to an emerging-market status and foreign investments pouring in.

https://www.bloomberg.com/news/arti...oveted-emerging-market-status-in-msci-upgrade

I would continue the economic reforms, increase productivity, continue to improve the emerging private sector, maybe most importantly increase the percentage of the woman workforce, and continue the wise investments across the world (most recently Tesla). Aside from investing in renewable and nuclear energy as planed as well on a massive scale.

If that IPO ever sees the light (quite possible), I hope the money will be invested inside KSA as there is so much potential. Groundbreaking projects such as NEOM and that gigantic solar project (200 times larger than the current biggest solar power plant in the world) should get the priority full stop.

EDIT: As usual Western media and their imaginary "insiders" inside KSA were wrong once again. It's becoming quite absurd. Maybe they are angry that their usual punching bag (when it comes to exaggerated and absurd news) is slowly disappearing and that they need to use the remaining or future ones instead? Too bad.

I thought the Aramco IPO was meant to partially fund the Neom project?.... How is the Neom project developing as of now?