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The Toronto stock exchange is still in talks with Aramco regarding the possibility of listing the shares of the Saudi energy giant on the Canadian bourse, the chief executive of the company operating it told Bloomberg. Lou Eccleston, CEO of TMX Group, said the company was in talks with the Saudi side and the Toronto bourse is “a legitimate contender.”
Aramco will list 5 percent of its stock on one or more foreign exchanges along with the Saudi bourse, and the world’s biggest trading hubs are in a fierce race to win the favor of the company that is hoping to conduct the biggest initial public offering in world history. Among them are London, New York, Hong Kong, Tokyo, and Singapore. Besides the fees that the IPO would bring in for the winner/s, the listing will also substantially enhance the reputation of the chosen exchange or exchanges.
Riyadh is betting a lot on the Aramco listing, but for now investor interest is lukewarm at best, it seems. The company’s value, according to Deputy Crown Prince Mohammed bin Salman, could be up to US$2 trillion, which means that 5 percent would fetch US$100 billion for the Kingdom. But since the staggering US$2-trillion valuation was first aired, institutional investors, fund managers, and industry professionals have been trying to find valuation metrics that add up to this figure, and have failed.
Part of the guardedness on the part of the investor world is that Aramco is one of the most opaque companies in the world. This has started to change in preparation for the listing, with the government even cutting its tax rate to 50 percent from 85 to sweeten the deal, and some expressions of interest have emerged.
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French Total is one of the companies that have declared interest, albeit a general one, with CEO Patrick Pouyanne saying at an industry event earlier this year that Total “may consider” buying into Aramco. The Saudi company is also in talks with Sinopec on a stake acquisition, but nothing is yet final.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.