Saudi Aramco to Restart Preparations for Mega IPO

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Saudi Arabia is restarting preparations for a potential initial public offering (IPO) of oil giant Aramco, months after putting the planned listing on hold, reported Bloomberg.

Aramco, the world’s most profitable company, recently held talks with a select group of investment banks to discuss potential roles on the offering. Detailed work on the IPO may pick up speed later this year or early next year, the people said, asking not to be identified because the information is private.

The revived IPO plan will still face significant hurdles, including the ability of kingdom to achieve the $2 trillion valuation it’s been seeking for the company. Demand for the share sale would also likely be affected by lower oil prices as well as growing concerns among top institutional investors about pouring money into fossil-fuel companies that contribute to climate change.

Saudi Crown Prince Mohammed bin Salman is also keen to list Aramco in New York, but advisers are said to be wary of opening up the company to the risks of U.S. litigation. Prince Mohammed has insisted that the IPO will still take place in 2020 or 2021.

After working with banks for more than two years, Aramco formally put the IPO plans on hold last year and instead decided to buy a $69 billion stake in local chemical giant Saudi Basic Industries Corp. Aramco is planning to wait until the Sabic acquisition is completed before conducting the IPO, one of the people said.

Aramco was originally working with Evercore Inc., Moelis & Co., HSBC Holdings Plc, JPMorgan Chase & Co. and Morgan Stanley on the planned share sale. It wasn’t immediately clear if all the banks had been approached again or if some new firms are also being considered.

No final decisions have been made, and … Read More...