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Saudi Arabia puts domestic stock exchange at center of Aramco IPO

Increase font size  Decrease font size Date:2019-10-16   Views:77
Saudi Arabia is focused on a domestic stock market listing for its state oil company, Aramco, and no decisions have been made for any international share sale, the Saudi ambassador to the UK told S&P Global Platts on Monday.

"We are tending now towards looking at a Tadawul listing," said Prince Khalid bin Bandar, referring to the Saudi stock exchange, after speaking at the Royal United Services Institute in London. "But if that doesn't work, then we will look otherwise. But the important thing is to be pragmatic, depending on the situation, and we'll wait and see how [the domestic listing] goes."
No international venues had been ruled out if a listing outside Saudi Arabia proceeds, he added.

"Everything is a candidate," the prince said. "We will do what's right for Saudi Arabia."

The much hyped Aramco IPO, first announced by Crown Prince Mohammed bin Salman in 2016, is a centerpiece of the kingdom's economic transformation plan, with officials aiming for a company valuation of $2 trillion, though analysts say $1.5 trillion is more realistic.

If the kingdom's desired valuation is achieved, the rumored 5% public listing could bring in $100 billion that could be used for development programs aimed at weaning Saudi Arabia off its reliance on oil revenues.

Reports indicate that the kingdom could float a small portion of the planned total listing -- perhaps 1% or 2% -- on the Tadawul, before looking internationally, where exchanges in London, New York, Tokyo and Hong Kong are among the contenders.

The Tadawul is the Middle East's largest exchange, with a market cap of Riyal 1.80 trillion ($479 billion). A 1% listing, even at the lower range of valuation estimates, would make Aramco one of the largest stocks traded on the Saudi bourse in terms of market value.

Details of the IPO will be announced later this month, Aramco Chairman Yasir al-Rumayyan said Monday, according to a report by Russia's Prime news agency.

"The Saudi Aramco IPO will happen very soon, our plans are moving along quickly and smoothly. You will hear about it very soon. I think we can expect this month," Rumayyan said during the Russia-Saudi Investment Forum held in Riyadh on the sidelines of Russian President Vladimir Putin's state visit to Saudi Arabia.

Saudi Aramco is the world's most profitable company and biggest oil producer, with exclusive rights to pump all of the country's vast reserves.

It claims a maximum sustained crude production capacity of about 12 million b/d, though significant chunks remain offline due to repairs following last month's attacks on its critical Abqaiq crude processing facility and Khurais oil field. Full capacity should be restored by the end of November, officials have said.

Saudi Arabia plans to produce 9.86 million b/d of crude in October and November, energy minister Prince Abdulaziz bin Salman said Monday, according to Prime news agency, with exports currently around 6.9 million to 7 million b/d.

The kingdom has a production quota of 10.31 million b/d under the OPEC/non-OPEC production cut accord, though it has held its output significantly below that cap as it seeks to accelerate the rebalancing of the oil market, given that oil prices remain far below the $80-$85/b that many analysts say Saudi Arabia needs to balance its budget.

Aramco also has significant downstream and storage assets globally, including refineries in the US, China, Japan and South Korea, in addition to domestic refineries.

As an alternative to an IPO, analysts have suggested that a private placement could be brokered with sovereign wealth funds.

Earlier Monday, Kirill Dmitriev, CEO of Russia's sovereign wealth fund the Russian Direct Investment Fund, said Russian investors were interested in the listing, Prime reported.
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