ZCZC
BCN-04
SAUDI-ECONOMY-ENERGY
Aramco says ready for two-stage IPO, timing up to govt
ABU DHABI, Sept 10, 2019 (BSS/AFP) – Saudi energy giant Aramco is ready
for a two-stage IPO but the timing is up to the government, its chief
executive said Tuesday, flagging a possible foreign listing as part of the
offering.
Aramco is “ready” for the giant stock market debut but the timing is a
“government decision”, Amin Nasser told reporters on the sidelines of the
World Energy Congress.
“One of the primary listings is going to be local but we are also ready
for listing outside.”
Nasser’s remark came after the Wall Street Journal reported last week that
Aramco was considering a domestic debut and a subsequent international
listing — possibly in Tokyo.
Aramco has said it plans to float around five percent of the state-owned
company in 2020 or 2021 in what could potentially be the world’s biggest
stock sale.
The planned IPO forms the cornerstone of a reform programme envisaged by
the kingdom’s de facto ruler Crown Prince Mohammed bin Salman to wean the
Saudi economy off its reliance on oil.
It aims to raise up to $100 billion based on a $2 trillion valuation of
the company, but investors have long debated whether Aramco is really worth
that much.
On Sunday, King Salman promoted one of his sons, Prince Abdulaziz bin
Salman, to the pivotal role of energy minister, replacing veteran official
Khalid al-Falih, as the top crude exporter accelerates preparations for the
much-anticipated IPO.
The appointment of Prince Abdulaziz marks the first time a royal family
member has been put in charge of the all-important energy ministry.
In his first comments since taking up the role, the minister on Monday
endorsed oil supply cuts, saying in Abu Dhabi that they would benefit all
producing nations amid an oversupplied market and sagging prices.
Crude prices are currently moving around levels of $60 a barrel, compared
with more than $75 a year ago, but were given a boost Monday by the Saudi
official’s comments.
– More reforms needed – The OPEC petroleum exporters’ cartel and key
independent producers are deliberating how to halt a slide in prices that has
persisted despite previous cuts and US sanctions that have squeezed supply
from Iran and Venezuela.
Abu Dhabi is also hosting this week a meeting of the Joint Ministerial
Monitoring Committee (JMMC) of the OPEC+ alliance for a supply cut deal
reached last year.
The ministers will consider fresh reductions, even though analysts are
doubtful such a move would succeed in bolstering crude prices which have been
badly dented by the US-China trade war.
The Aramco listing is key to Saudi’s economic future. Its GDP grew by 2.4
percent last year but the International Monetary Fund (IMF) said growth would
fall to 1.9 percent in 2019 due to substantial oil output cuts.
The IMF said Monday that the kingdom’s fiscal reforms, including a
consumption tax and higher energy prices, have started to yield results but
that more is needed to plug a chronic budget deficit.
The prospect of falling short of the $2 trillion valuation desired by
Saudi rulers is widely considered the reason the IPO — previously scheduled
for 2018 — has been delayed.
Earlier this month, Aramco said its first half net income for 2019 slipped
nearly 12 percent to $46.9 billion on lower crude prices.
It was the first time the company has published half-year financial
results and comes after Aramco opened its secretive accounts for the first
time in April, revealing itself to be the world’s most profitable company.
If the foreign portion of the Aramco listing goes ahead in Tokyo, it would
be a setback for London, New York and Hong Kong, which have all vied for a
slice of the business.
Political uncertainty in Britain over its plan to exit the European Union
and public protests in Hong Kong had diminished their prospects, the Journal
cited Saudi officials and advisers as saying.
BSS/AFP/FI/ 1438 hrs