Saudi Aramco considering ‘range of options’ for share sale

Saudi Aramco is considering a “range of options” for a listing on stock markets but has not ruled out the possibility of a private sale of shares to global institutions and sovereign wealth funds, it has emerged.

One potential alternative to an immediate listing on global stock exchanges is a trade sale to Chinese investors, with whom talks have taken place in recent weeks, according to a report in the Financial Times citing five people familiar with the initial public offering (IPO) plans. 

A spokesperson for Aramco declined to comment on a possible private deal with Chinese or other sovereign investors. 
A statement on behalf of Aramco said: “A range of options, for the public listing of Saudi Aramco, continue to he held under active review. No decision has been made and the IPO process remains on track.”

However, a person close to Aramco told Arab News that there was increasing speculation within the Saudi oil industry that Chinese government investors were interested in buying up to 10 percent of Aramco in a private deal ahead of any listing on an international stock market.
If such a deal went through, there would still be an option to list Aramco shares on the Tadawul in Riyadh next year, and the possibility of an international IPO in New York or London later, the person said. 

One element of the thinking about such a plan is the likelihood that there will be more demand for Aramco shares once Saudi Arabia is included in the MSCI index as an emerging market, which might not happen until 2019, the person said.

There was a possibility too of a long-term deal to supply oil to Chinese consumers as part of any deal to sell shares.
The IPO was slated for the end of 2018, but recently there has been speculation it might slip into 2019.

The person stressed that no final decision had been taken, and the possibility of a full IPO on a Western market, as well as on the Tadawul, was still an option.
A public listing of Aramco, which has been valued at around $2 trillion, would be the biggest IPO in history. There were indications that some 5 percent would be floated on at least one other exchange apart from the Tadawul, with an IPO value of $100 billion.

New York and London were regarded as the leading contenders for the foreign IPO, but there have been issues with both. New York has been seen as too litigious, while London was regarded as not big enough to handle such an IPO.

The privatization of Aramco is seen as the centerpiece of the Vision 2030 strategy to diversify the Kingdom’s economy away from oil dependency.