The dreams of an Aramco IPO are fading fast after the oil giant announced it is pushing to complete its initial public offering this year by relying more on local investors.
The state-owned oil producer is considering making a formal announcement of the listing plan as soon as the next few weeks, sources told Bloomberg. The kickoff, originally slated for Oct. 20, was postponed after overseas investors pushed back at its touted $2trn valuation.
Tepid oil prices, the fraught politics of the Middle East and the demonization of fossil fuel producers in response to climate change fears have all made the initial public offering (IPO) an impossible mission, as S&P Global Platts Insight blog notes.
The world's biggest oil company had been expected last week to launch the domestic sale of a 1-2% stake, but the signing up of marquee backers has been hampered by continuing valuation concerns exacerbated by recent attacks on Aramco's Abqaiq and Khurais plants.
Prince Mohammad Bin Salman, the kingdom's de facto ruler, has made the Aramco IPO a pillar of an ambitious economic reform drive. He wants the company to be valued at about $2trn, though bankers and company insiders put the value closer to $1.5trn.
While Aramco may need to reduce its valuation expectations below the initial $2trn target, local institutions are seen as less sensitive to the pricing, one of the people said.
Whether Aramco can still succeed in listing this year will depend on whether it can drum up enough demand from Saudi investors as well as the regional funds it's been approaching, Bloomberg reported.