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It has been a while since the last assurance from a senior Saudi official that the initial public offering of oil giant Aramco is going ahead as planned, and this time the assurance comes from the top: Crown Prince Mohammed himself told Saudi daily Asharq Al Awsat that the IPO is on track for 2020 or 2021, depending on market conditions, The National reports. Ahead of that, in August this year, the company would hold its first earnings call.
The listing of 5 percent in Aramco, which last year emerged as the world’s most profitable company booking US$111.1 billion in annual net earnings, is the foundation of the Crown Prince’s ambitious economic diversification program dubbed Vision 2030. While some have questioned the valuation of the company, its recent maiden international bond worth US$12 billion drew an estimated US$100 billion in investor interest.
The IPO, however, has been surrounded by problems, from the choice of venue for its international listing to its effect on its home exchange given the size of the company. At one point, the deal was said to have been shelved for the observable future because the market conditions were unfavorable but soon after Aramco’s chief executive said the listing would go ahead as planned, just a bit later.
As part of the preparation for the listing of the century, Aramco acquired a majority stake in petrochemicals major Sabic to make itself even more appealing for investors. It was for this deal that it had to tap international bond markets: the price tag for the 70 percent in Sabic cost about US$70 billion.
Some observers of a more critical bend have noted that Riyadh is already spreading itself too thin, investing billions in various projects while Aramco is still 100-percent government owned. However, Crown prince Mohammed told Asharq Al Awsat that the Vision 2030 program has moved into the implementation stage.
“Like any strategic plans, [Vision 2030] must be subject to updates and modifications according to circumstances and actualities that become evident upon application, without shaking the vision’s pillars and objectives,” Mohammed said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.