Saudi bourse ready to stage Aramco IPO

Tadawul is prepared for Aramco share sale regardless of the company’s listing structure


DUBAISaudi Arabia’s stock market is pulling out all the stops for what could be the world’s largest initial public offering (IPO).

The exchange, known as Tadawul, is prepared for Saudi Arabian Oil Co’s (Aramco) share sale regardless of the structure that the company decides to use for the listing, CEO Khalid Al Hussan said in an interview on Wednesday.

“Tadawul will be the home exchange for Aramco, and, if there is another exchange, the decision will be coming from the issuer in due course,” Al Hussan said. The bourse is “taking all measures to ensure Aramco comes successfully to the market”, he said.

The IPO of the world’s largest oil exporter has drawn interest from international stock exchanges in New York, London, Hong Kong, Singapore, Tokyo and Toronto and even spurred US President Donald Trump and UK Prime Minister Theresa May to lobby for the listing. Saudi Arabia, which values Aramco at US$2 trillion (RM7.98 trillion), is seeking to sell state assets as part of a plan to wean the economy off oil and create the world’s biggest sovereign wealth fund.

“I can comfortably say we are ready to host such a unique IPO,” Al Hussan said.

The listing has also seen intense competition by banks from New York to Tokyo for a role on the deal. Aramco is set to appoint lenders including Goldman Sachs Group Inc, Citigroup Inc, HSBC Holdings plc, JPMorgan Chase & Co and Morgan Stanley to help manage the sale, people familiar said this month.

While the Tadawul says it is ready for the Aramco share sale, several key questions are still unanswered. There is no announcement yet as to whether a listing on an international exchange will also take place, or where it would be. In one of the most recent statements by a government official on the process, Finance Minister Mohammed Al-Jadaan said in December that all options are open on where to issue stock of the giant oil producer.

There are also doubts over whether the company can meet the US$2 trillion valuation expectation set by Crown Prince Mohammed Salman. Some banks pitching for roles on the IPO are tentatively valuing the company at between US$1 trillion and about US$1.5 trillion, people familiar told Bloomberg this month.

External analysts have also put much lower valuations on the company. Sanford C Bernstein & Co said in March that Aramco could be valued at US$1 trillion to US$1.5 trillion. Tudor Pickering Holt & Co LLC, a Houston boutique bank focusing on energy, put the valuation at US$1.1 trillion.

Aside from preparing for Aramco’s debut, Tadawul is also planning its own IPO later this year after hiring HSBC’s Saudi unit to advise on the listing in 2016. Work is “progressing as planned,” Al Hussan said.

There were 16 IPOs in Saudi Arabia in 2017 that raised about US$722 million, exceeding the US$274 million a year earlier, according to data compiled by Bloomberg. There should be more listings this year across the main market, the small-cap market, and by real estate investment trusts, he said. — Bloomberg