Saudis Shortlist New York, London, Hong Kong For Aramco IPO

Saudi Arabia has shortlisted New York, London, and Hong Kong for the initial public offering of its oil giant Aramco, with the three exchanges considered either singly or a combination of two of them, or even all three, Reuters reported on Thursday, citing two sources familiar with the latest developments.

Picking those three potential venues, plus the domestic Saudi stock exchange, means that Toronto, Tokyo, and Singapore are no longer in the running for hosting what is expected to be the largest IPO in history.

Saudi Arabia still plans to have Aramco listed in late 2018, according to Reuters’ sources.

The final decision will be made by Saudi Crown Prince Mohammad bin Salman, who is in charge of supervising Saudi Arabia’s oil and economic policies, the sources added.

One of the sources told Reuters that talks involved listing Aramco at least on two of the three shortlisted foreign exchanges. According to the other source, the Saudis may opt for a phased listing, with the domestic listing taking place first, and listing(s) in the foreign exchanges at later stages.

At the start of this year, Saudi Arabia took a big step toward the IPO, making Aramco a joint stock company with a fully paid capital of US$16 billion (60 billion riyals) divided into 200 billion ordinary shares, and a board of eleven directors who will be in charge of the company’s listing.

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The London Stock Exchange has been widely considered a favorite for the floating, with the UK government and the Financial Conduct Authority—the financial markets watchdog—both working hard to win the hearts of the Saudis. However, these efforts on the behalf of the FCA backfired when it was revealed that the regulatory authority was considering changing its listing rules especially for Aramco.

The planned sale of 5 percent of the oil giant could bring Saudi Arabia US$100 billion, if Saudi officials’ valuation of the company at US$2 trillion stands. Analysts value the Kingdom’s oil giant at much less, with the majority putting the valuation at between US$1 trillion and US$1.5 trillion.

By Tsvetana Paraskova for Oilprice.com

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