Al-Falih: IPO of Saudi Aramco depends on oil, stock market

Khalid Al-Falih

ALKHOBAR: Energy, Industry and Mineral Resources Minister Khalid Al-Falih announced that initial public offering (IPO) of Saudi Aramco depends on oil and stock market conditions.

That will have a role to play in mapping out the planned IPO of Saudi Aramco and preparations will take some time, he told German newspaper “Handelsblatt”.
“The size and complexity of an initial public offering of Saudi Aramco will require a great deal of internal preparation,” he added in a report published in Asharq Al-Awsat.
Al-Falih said: “The actual IPO timeframe will also be subject to a number of external factors including equity market conditions, oil price outlook, and domestic capital market readiness.”
Handelsblatt reported that Al-Falih was cagey about the IPO.
During the interview, Al-Falih also discussed Saudi Vision 2030 and how important it is that German companies take part in it.
It is expected for the IPO of Aramco to become the world’s largest-ever public offering given that the government plans to sell about 5 percent of the shares before the end of 2018. Deputy Crown Prince Mohammed bin Salman estimated it to be between $2 trillion and $3 trillion.
The interview came as Siemens won a contract to develop gas turbines in Saudi Arabia of an estimate of $500 million.
This is the first time that Al-Falih speaks out about IPO of Aramco since his press conference in Vienna in June during The Organization of the Petroleum Exporting Countries (OPEC) meeting.
Al-Falih told the reporters back then that they will convince investors to maintain an oil surplus for its long-run benefits. He commented that investors “should accept this policy.”
During his visit to the US in Ramadan month, Al-Falih spoke with “Houston Chronicles” newspaper, yet little was mentioned about the IPO.
International banks’ main concern regarding IPO of Aramco is the company’s policy of maintaining an oil surplus to be used in crisis times. Banks believe this is not feasible given that these are non-used assets and no other international oil company does that.
Aramco is studying options to launch less than 5 percent of the company shares including local stock market or double launch that includes the international market.
Al-Falih said that the time frame set to list Aramco by 2018 is “reasonable”.
He concluded that the main concentration now is the IPO of Aramco as parent company and not subsidiaries.