Aramco’s IPO Listing, going east or west


Saudi Arabia is still in talks with strategic investors such as China, Japan, the US, the UK and South Korea before deciding where to list Aramco shares, according to sources close to the discussions.

The Kingdom plans to sell up to 5 percent of Aramco shares on one or more of the foreign exchanges in addition to Riyadh. As time is running out the decision shows that the initial public offering (IPO), which could be the biggest in history, remains unsettled.

U.S. President Donald Trump has urged Riyadh to list Aramco on the New York stock exchange, and British Prime Minister Theresa May has called for it to be in London. However, Riyadh also has to take into account views over where the shares should be listed from the countries expected to be Aramco’s biggest cornerstone investors — those who commit in advance to invest a fixed amount of money or for a fixed number of shares. Sources close to the IPO said decisions must be taken by March if the IPO is to be carried out in October or November, and otherwise could be delayed until next year. “Everyone is talking about venues for the listing and why they haven’t been chosen yet. Indeed, you have Trump encouraging Aramco to list in New York and May encouraging to list in London. But that is only the tip of the iceberg,” said a senior Saudi source close to the IPO process. “Aramco is also holding talks with cornerstone investors, who often express their views on where Aramco should list. And hence Aramco and the Saudi government need to think how to get the best value out of all this, how to get the best strategic arrangements out of this.”

Asia has become the biggest and most important buyer of crude oil from Aramco and the giant oil firm wants to secure Asian markets for the long-term as it faces competition from suppliers in Russia and the United States. The sources have said that some cornerstone investors were keen to see Aramco listed on Asian and Saudi exchanges rather than in New York or London.

“Bankers have been emphasising to Aramco the importance of securing cornerstone investors first before moving forward with a decision on the listing. Asian cornerstone investors are most logical as that is where the oil flows to,” a Gulf-based banker familiar with the IPO preparations said.

“If the IPO is going to be done in the second half of the year, then the government really does need to have a decision… They will have to get the prospectus out by the beginning of the second quarter,” said a second senior source. “If you are going to do it, you might as well do it now,” the source said, referring to a rise in oil prices to $70 per barrel.

Washington has been a longstanding political ally of Riyadh and New York offers the best liquidity of all exchanges but has stricter disclosure requirements than the London or Hong Kong exchanges.

The second source said international exchanges such as London, New York and Hong Kong were still being analysed but options also included making Hong Kong the only listing abroad, or listing on Hong Kong plus private placements with cornerstone investors.

Crown Prince Mohamed Ben Salman is scheduled for a visit to the US in March, the Saudi Embassy in Washington in an email to Al-Monitor confirmed that the ambassador, Prince Khalid bin Salman, “along with relevant Saudi government entities, are working on organising a trip for the Crown Prince; the details of which are still being determined.” Yet, it is certainly expected that Aramco’s listing will be discussed.


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