News agencies, citing a story from the Wall Street Journal (WSJ), have revealed that the much vaunted initial public offering (IPO) of Saudi Arabian oil giant Aramco is now seriously in question.
The flotation was due to occur at some point in 2018 but speculation emerged several months ago that the listing might be delayed until next year. Financial analysts had already cast doubts on the ability of the local Tadawul stock exchange to handle the IPO, and the subsequent overwhelming interest from regional and domestic investors in the firm’s shares. It had been thought the firm might float on a large international exchange instead such as in London or New York.
However, sources close to the firm have told the WSJ the company isn’t actually ready for an IPO and there is also concern regarding the amount of scrutiny Saudi Aramco would come under once it listed. A senior executive at Aramco told the New York based daily, “Everyone is almost certain it is not going to happen.”
Law firms earmarked for a role in the transaction apparently met earlier in the year in Dubai but they have recently been told that there are no firm plans for the flotation to take place.
Bloomberg has speculated that the supposed market valuation of the firm, $2tn as estimated by the kingdom’s Crown Prince Mohammed bin Salman, is an issue – as this would price Aramco at double the present value of Apple Inc. as an example. Meanwhile, major global investors have also apparently shown modest interest in a firm that they perceive is over-valued.
At this point in time, there has been no comment from Saudi Aramco executives on the validity of this story.