Saudi Aramco has denied a report in the London-based Financial Times that the state-controlled company will shelve its plans to list part of the company on international indices in favor of private placements.
The Financial Times reports that talks about “a private sale to foreign governments including China and other investors have gathered pace in recent weeks,” citing five people familiar with the initial public offering preparations. The reason given in the Financial Times report was “growing concerns about the feasibility of an international listing” including the transparency requirements as a government-owned entity that is intertwined with the bureaucracy of the kingdom.
Amin H. Nasser, President and chief executive officer of the Saudi Arabian Oil Company (Saudi Aramco).
One source told CNBC “Saudi Aramco thinks by years, if not decades and financial markets think quarter by quarter.”
CNBC also reports that Helima Croft, head of global commodities research at RBC, said that all previous stories about issues or delays with the 2018 IPO have been quickly denied.
“I think it is always worth remembering that a key goal of the Aramco sale was to yield $100 billion for the Public Investment Fund. Private placement may simply be the easier way to get to that goal in 2018,” said Croft.
If the IPO is not shelved entirely, it may be likely to be delayed from the original date of 2018. According to the original FT report, a source said that Aramco’s IPO preparations were not under an active push to “abandon” the international listing, but could be delayed “to 2019 or later.”
“He said by not pursuing a London or New York listing the company would risk forgoing the deepest pools of international capital.”
