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World’s Largest IPO Delayed Once Again

Just days after people close to the preparations for Aramco’s IPO said Riyadh was due to official greenlight the deal this week, other sources told Reuters the IPO would be greenlit after Aramco releases third-quarter financial results.

The postponement was aimed at boosting investor confidence with another strong quarter, the Reuters sources said.

The earlier report, from the Financial Times, cited sources in the know who said that after the government granted its approval for the listing, the Aramco board of directors would give it the go-ahead. That was expected to take place on Sunday, October 20. Yet another FT report, from Thursday, also citing sources in the know, said the listing could be delayed for several weeks.

“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” one of the Reuters sources said.

“The official line was that the Q3 results were very good, so they want to update the analysts and market the IPO after the Q3 numbers,” said another.

Indeed, the IPO makes less sense if it falls short of the valuation expectations of Riyadh and Crown Prince Mohammed, in particular. It was he who spearheaded a reform drive in the Kingdom, and the listing of Aramco valuing it at $2 trillion was to be the financial foundation of that drive.

The moment is delicate. The drone and missile strikes against a Saudi oil field and a processing plant temporarily took 5.7 million bpd in production capacity off the market, sparking fears it would take Aramco a long time to bring things back to normal. The company, however, has reported that production and production capacity will have fully recovered by the end of next month and that has quenched concerns somewhat.

Whether the third-quarter results of the company will restore investor confidence in the future stability of the company remains to be seen. Aramco has yet to announce when it will release its third-quarter financial report.

By Irina Slav for Oilprice.com

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  • John Di Laccii on October 19 2019 said:
    I agree, MBS is dreaming of 2 T but will get not more than 400 B. One dimensional economy and the time bomb is ticking off.
  • Mamdouh Salameh on October 18 2019 said:
    Read my lips. The original Saudi Aramco Initial Public Offering (IPO) will never see the light of day because of persistent question marks about Saudi proven oil reserves and risk of US litigation in relation to 9/11.

    Even listing 3% of Aramco’s shares on the domestic stock market, Tadawul, could overwhelm it and create a serious liquidity problem as well as forcing reluctant local investors to borrow heavily to fulfil the government wishes.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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