Saudi gov’t shelves Aramco IPO, dashing hopes of record LSE listing

Saudi Arabia has postponed indefinitely both the domestic and international stock listing of its state oil giant Aramco, which was expected to mark the biggest such deal in history.

The development, which was reported last night by Reuters, marks a major set-back for crown prince Mohammed bin Salman’s wide-ranging and ambitious plans for economic reforms.

A source told Reuters: “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.”

The Saudi energy minister Khalid al-Falih said in the statement: “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.”

The initial plan to sell 5% of Saudi Aramco, the world’s biggest energy company, was central to bin Salman’s plan to diversify the economy, and was expected to value the firm at upwards of $2 trillion. The proceeds of the Aramco floatation were earmarked as key pillar of the crown prince’s Vision 2030 reform package.

London’s loss
The development will be met with disappointment in London. The London Stock Exchange (LSE) was widely thought to have the edge over New York for securing the coveted listing. The LSE even adapted its rules last year in expectation of the deal going through. In September, the UK’s Financial Conduct Authority (FCA) defended its decision to create a new listing category for companies owned by sovereign states, following complaints by MPs.

Last night’s news was not, however, altogether unexpected. The listing’s continued delay (reported by International Investment) was, just last month, attributed to government in-fighting. It was widely believed that bin Salman had clashed with al-Fatih, who is thought to have suggested at the time the sale was bad for the country’s economy. Others argue that Riyadh was uncomfortable with the level of scrutiny a public listing of this scale would afford in the normally opaque kingdom.

Christopher Copper-Ind
Christopher Copper-Ind is Publisher and Editor of International Investment. His previous publishing experience focused largely on the Middle East and emerging markets, and he was Editorial Director of The Business Year, based in Istanbul, for three years before moving back to London in 2017. He is the author of How to Negotiate, to be published by Macmillan in 2019.

Read more from Christopher Copper-Ind

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