Saudis kill Aramco IPO; oil giant disbands advisers

SAUDI ARABIA has called off plans for the domestic and international listing of state oil giant Aramco, billed as the biggest stock flotation in history, four senior industry sources said on Wednesday.

Financial advisers working on the planned listing have been disbanded as Saudi Arabia shifts its attention to a proposed acquisition of a “strategic stake” in local petrochemicals maker Saudi Basic Industries Corp, two of the sources said.

“The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way – first delay then calling off,” a Saudi source said.

“The message we have been given is that the IPO has been called off for the foreseeable future,” said a second source, a senior financial adviser. “Even the local float on the Tadawul Stock Exchange has been shelved,” that person said.

Early on Thursday, Saudi Arabia’s energy minister issued a denial that the IPO had been called off.

“The government remains committed to the initial public offering of Saudi Aramco, in accordance with the appropriate circumstances and appropriate time chosen by the Government,” Khalid al-Falih said in a statement.

Falih said Riyadh had taken measures to prepare for the listing and the timing would depend on factors including favourable market conditions.

The proposed listing was a central part of Crown Prince Mohammed bin Salman‘s reform drive aimed at restructuring the kingdom’s economy and reducing its dependence on oil revenue.

The prince announced the plan to sell about 5 per cent of Aramco in 2016 via a local and an international listing, predicting the sale would value the whole company at US$2 trillion or more. Several industry experts questioned whether a valuation that high was realistic, which hindered the process for advisers preparing the IPO.

A third industry source said the IPO had been called off for the time being but that it could be revived in future, if appropriate.

“It has been postponed until further notice,” the source said.

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Stock exchanges in financial centres including London, New York and Hong Kong have been vying to host the international tranche of the share sale. An army of bankers and lawyers have competed to win advisory roles in the IPO, seen as a gateway to a host of other deals they expect to flow from the kingdom’s wide privatisation programme.