Aramco's 2018 IPO Schedule Is Wavering

Updated on
  • Al-Falih reveals first cracks in 2018 timing for offering
  • Saudi kingdom’s crown jewel may fetch $2 trillion valuation
Saudi Aramco CEO Amin Nasser says the firm is "ready to be listed" in the second half of 2018.

Saudi Arabia’s oil minister said the initial public offering of oil giant Aramco will take place “when the time is right,” revealing the first crack in the kingdom’s earlier plan to debut the company this year.

“We hope that 2018 will be the right time, but ultimately we have to make sure the market is ready,” Khalid Al-Falih said the World Economic Forum in Davos.

His comments indicate a possible shift from Riyadh’s long-standing assurances that the IPO was “on track and on time” for the second half of 2018. Al-Falih declined to answer questions about whether the IPO could be postponed to 2019.

The Saudi Arabian Oil Co. offering would be one of the biggest events in financial markets this year and any alteration is of significant interest to global investors. Saudi officials said they hope to raise a record $100 billion, valuing the company at more than $2 trillion and dwarfing the $25 billion raised by Chinese Internet retailer Alibaba Group Holding Ltd. in 2014.

Diversifying

The IPO is the brainchild of Crown Prince Mohammed Bin Salman and the cornerstone of his Vision 2030 program to reform the country’s oil-dependent economy. Privately, Aramco executives and advisers said that if the government gives the green light soon, a listing during the second half of this year in Riyadh is possible, but that additional listings in London or New York would be very difficult.

Earlier, Aramco Chief Executive Officer Amin Nasser drew a distinction between preparatory work for a 2018 IPO, which he said was complete, and the decision to go ahead with the actual sale, which is in the hands of the royal court. He also said the kingdom’s rulers have yet to decide on the location for a second listing outside Riyadh.

“We are currently waiting for the decision from the shareholder,” Nasser said, referencing the government during a Bloomberg Television interview in Davos.

Foreign Exchanges

The international IPO is proving difficult for several reasons. First, Prince Mohammed has said publicly Aramco should be valued at $2 trillion or more, a figure few outside the kingdom see as realistic. Saudi authorities are also struggling to reconcile their desire for the biggest possible pool of capital, probably to be found in New York or London, with their preference for less-stringent regulation, which would point to Hong Kong.

Asked whether the IPO could be postponed to 2019, Nasser said: “We don’t know. It’s all depending on how soon we hear about the second venue. But currently, we’re ready for the second half of 2018.”

Any delay in selecting the venue affects other preparations such as accounting, putting the schedule under further pressure. Yet the IPO is so important for Prince Mohammed -- the kingdom’s dominant political force -- that few would dare to bet against it happening.

Asked whether the IPO could be postponed to 2019, Nasser said: "We don’t know. It’s all depending on how soon we hear about the second venue. But currently, we’re ready for the second half of 2018."

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