Saudi Arabia insists 'committed' to Aramco IPO

Riyadh - Saudi Arabia's energy minister denied that Aramco's initial public offering would be called off

Saudi Arabia on Thursday rejected reports that Aramco's planned initial public offering had been scrapped, insisting that the Kingdom was committed to the stock market debut of the state energy giant.
"The government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum," energy minister Khalid Al Falih said in a statement.
Khalid Al Falih refused to specify the timing for the IPO, reiterating that it depended on "multiple factors, including favourable market conditions and a downstream acquisition which the Company will pursue in the next few months".
"This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition which the Company will pursue in the next few months, as directed by its Board of Directors," he said.
"To prepare for the listing of Saudi Aramco, the Government has undertaken a number of major preparatory measures including issuing a new income tax law as it relates to hydrocarbons activities; reissuing a long-term exclusive concession; and appointing a new Board of Directors, amongst other measures to safeguard its interests and those of the company's future private shareholders.
"The company, for its part, has completed its internal program for IPO preparedness. Specifically, it has amended its bylaws; converted to a joint stock company; ensured that its internal segmental financial reporting aligns with potential listing venue requirements; established an investor relations function; and undertaken the first independent certification of its hydrocarbon reserves, all confirming the company's peerless status in the industry.
This is all positive progress on what is a complex process, preparing the company and the Kingdom for what will ultimately be a global landmark market offering of unprecedented quality and scale," Khalid Al Falih said.
The plan to float around five per cent of Aramco - expected to be the world's largest stock sale - forms the cornerstone of a reform programme envisaged by Crown Prince Mohammed bin Salman to wean the economy off its reliance on oil.
But Aramco executives have repeatedly cited unfavourable market conditions to push back the IPO, earlier scheduled for this year, with many observers sceptical whether the listing will happen at all.
Fresh speculation about the listing swirled late Wednesday after a media report that the kingdom had halted the plan and financial advisors working on it had been disbanded.
London, New York and Hong Kong have all vied for a slice of the much-touted IPO.
But experts say Aramco's inability to generate a $2 trillion valuation sought by the crown prince and legal concerns that the IPO will invite unprecedented scrutiny to the company have prompted indecision and delays.
He did not elaborate on the acquisition but Aramco chief executive Amin Nasser last month confirmed preliminary talks to acquire a "strategic stake" in SABIC, the world's fourth largest petrochemicals company that is 70 per cent owned by the government-run Public Investment Fund (PIF).
Nasser had acknowledged in an interview to Al Arabiya television that a potential SABIC deal would "affect the time frame for Aramco's initial public offering".

Observers see the acquisition of a stake from PIF as a complex alternative to raise much-needed cash for the kingdom's top sovereign wealth fund.

SABIC, Saudi Arabia's largest publicly listed company, has a market capitalisation of around $100 billion - the same amount the Kingdom had sought to raise from Aramco's IPO.

• Saudi Arabia