October 01, 2017

Aramco IPO on track for 2018

Into market reality. Saudi Aramco’s Juaymah facility. (Reuters)

London - Saudi Finance Minister Mo­hammed al-Jadaan has told bond investors that the pro­posed Saudi Aramco initial public offering (IPO) would take place in 2018 as expected, sources told Reuters.
The confirmation of the govern­ment’s plans to list 5% of Saudi Aramco came after reports surfaced that the listing would be delayed until 2019 and that officials working on the undertaking were looking for contingency plans.
Saudi Aramco has crude oil re­serves of 265 billion barrels, more than 15% of global oil deposits. It produces more than 10 million bar­rels per day, three times as much as the world’s largest listed oil com­pany, Exxon Mobil, and its reserves are more than ten times larger. Sau­di officials and energy experts said Aramco is worth $2 trillion.
Aramco, for the first time since it was established in 1933, will open its books following an extensive auditing process. If the plans for a 2018 listing go through, Aramco will release its audited financial records early in the year.
“Aramco will have its 2017 results by the first quarter; the audited ac­counts will be available then, so the IPO could happen after that,” a source familiar with the situation told Reuters.
Aramco plans on listing its IPO on the Riyadh stock exchange, Tad­awul, and one or two listings on in­ternational markets. Several coun­tries have courted the kingdom to win the ability to list Aramco shares, seen as a boon to any stock market.
Aramco is said to be leaning to­wards the New York Stock Exchange (NYSE), rather than London, be­cause the United States has deeper pools of capital, reported the Econ­omist, which said Saudi Arabia’s ef­forts to include Chinese investors might result in shares being issued in Hong Kong.
A listing on the NYSE would re­quire Aramco to have its accounts arranged based on the United States’ generally accepted account­ing principles (GAAP) while a listing in London or Hong Kong would re­quire the firm’s paperwork to meet International Financial Reporting Standards (IFRS).
Reuters reported that Aramco has prepared its accounts based on IFRS standards but can adjust them to GAAP standards if necessary.
The Aramco IPO is the centrepiece of the Saudi Vision 2030 economic reform initiative, the brainchild of Saudi Crown Prince Mohammed bin Salman bin Abdulaziz intended to wean the kingdom’s economy off its dependency on the traditional en­ergy sector.
Revenues from the Aramco IPO are to be invested in the kingdom’s sovereign wealth fund, known as the Public Investment Fund (PIF), which is to invest in non-oil related venture domestically and globally.