Saudi Aramco expected to list first on Saudi stock exchange, delaying international debut

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Sources said the Aramco listing will be much smaller than anticipated in the international market, and that an Asian cornerstone investor is likely to participate. A big investment in Aramco by China’s sovereign wealth fund has long been rumored, but never confirmed by the Saudis.

“Asian sovereign wealth funds have always been in the mix. There’s no reason for them to close the door to London or new York, but they could have figured the prudent path was to do it in Riyadh first,” one market source said. “There are many ways to define an IPO.”

An international listing of Aramco was seen as the centerpiece of the powerful Crown Prince Mohammed bin Salman’s efforts to reshape the Saudi economy and reduce the nation’s reliance on oil revenues. It was seen valuing Aramco at $1 trillion to $2 trillion and raising about $100 billion to underwrite an expansion of the kingdom’s public investment fund.

A rebound in oil prices following the 2014 collapse of the crude market has somewhat curbed the need for such a large IPO, sources told the Wall Street Journal.

One factor favoring the idea of first listing locally is the anticipated award in June of emerging market status for Saudi Arabia by index firm MSCI. That designation could bring a wave of foreign capital into the local market next year as global fund managers add Saudi Arabia to their holdings.

Still, the market capitalization of the entire Saudi stock exchange is under $500 billion.

The money that flows from Aramco’s oil wells to state coffers is the linchpin of a social contract between the ruling royal family and average Saudis. Investors long questioned how Aramco would balance that contract with its citizens, who have come to depend on generous social spending, with its responsibility to shareholders post-IPO.

A listing on the New York Stock Exchange has long raised concerns about litigation risks. Family members of those killed in the World Trade Center attack on Sept. 11 have long sought to press a legal case against Saudi officials, alleging they shielded some of the attackers.

Earlier this year, Saudi Aramco CEO Amin Nasser told CNBC his company was ready to go public, but was waiting for its sole shareholder, the Saudi government, to decide on an international listing venue.



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