As the world gets closer to the proposed date of Aramco’s IPO, what does the future hold? The Saudi state oil company, which has access to the second largest proven oil reserve in the world, would likely be one of the most valuable companies in the world. According to Reuters:
Prince Mohammad (the Crown Prince) has said the IPO, which could be the world’s biggest, will value Aramco at a minimum of $2 trillion and could raise as much as $100 billion… Aramco’s listing is planned on Saudi Arabia’s local stock market plus at least one overseas exchange. New York, London and Hong Kong are the main contenders.
The plan is for the company to go public by 2018 but Bloomberg reports that:
Riyadh was making contingency plans for a possible delay by a few months into 2019. Several important decisions on the IPO have yet to be taken, including which stock exchanges will list the shares.
The addition of such a massive IPO to the markets would go a long way towards alleviating the large IPO drought that has existed for the past couple of years. The competition to host the oversees exchange will therefore be a heated battle.
The IPO will have other consequences as well. The larger strategy is to allow Saudi Arabia to diversify its economy, a plan known as “Vision 2030.” If the IPO is effective and raises as much as $100 billion, then the Saudi government will have an immense amount of capital to begin investing in new projects. This could open the door to other forms of investment such as construction or finance akin to the UAE’s model. Of course all of this is speculation, but the potential is there.
To read Reuters’ article on Aramco’s IPO, click here.
To read Bloomberg’s article on the IPO, click here.
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