Friday, October 13, 2017

Are the Saudi's dumping their Aramco IPO in order to sell stakes to the Russians and Chinese

On Oct. 13 an interesting piece of financial news was reported that could have significant consequences to the current geo-political order.  After two years of plans to go public with their sovereign oil conglomerate, Saudi Arabia announced that they are pulling back the IPO to instead sell off partial stakes to private interests.

We noted a month ago that the long-awaited Saudi Aramco IPO, scheduled for mid-2018, could be delayed to 2019, but now, according to The FT, Aramco is considering shelving plans for an IPO altogether in favor of a private share sale to the world’s biggest sovereign wealth funds. 
The FT notes that talks about a private sale to foreign governments - including China - and other investors have gathered pace in recent weeks, according to five people familiar with the IPO preparations, amid growing concerns about the feasibility of an international listing. 
The Saudi state oil company has struggled to select a suitable international venue for its shares, as New York and London have vied for what has been billed as the largest ever flotation. 
The company would still aim to list shares on the kingdom’s Tadawul exchange next year if they pursue the private sale, the people said. 
The latest proposal by the company’s financial advisers was described by one of the people as a “face-saving” option for Saudi Aramco, which has worked on plans to list its shares internationally for more than a year. 
Desk chatter included comments that the Saudis were anxious about the level of due diligence and transparency involved in a public offering. 
A Saudi Aramco spokesperson said: 
“A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track.” - Zerohedge
It is interesting to see that this sudden move by the Saudi's comes just a short time after King Salman visited Moscow for the first time in history, and also as the Arab Kingdom prepares to begin adding the Yuan to the basket of currencies they are willing to sell their oil in.

Additionally, by selling a large enough stake of Aramco to either the Russians or the Chinese, Saudi Arabia will have access to the largest energy consortium on the planet (Moscow), and the largest banking center (Beijing) which may ensure that they can play a part in further exploration and production that would occur outside their own borders.


Post a Comment