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Aramco reaffirms IPO plan

Crown Prince confirms commitment to giant share offering but no decision on timing and location

Saudi Arabia has reiterated that it is committed to selling shares in state-owned Saudi Aramco through an initial public offering (IPO) though no decision has been made on the precise timing.

Crown Prince Mohammed bin Salman said: “We are committed to the IPO of Saudi Aramco based on appropriate conditions and at the right time.”

He told Saudi-owned Asharq al-Awsat newspaper that the IPO of Saudi Aramco “will take place in (late) 2020 or the start of 2021,” almost two years later than initially planned.

Saudi Arabia is aiming to raise more than $100 billion by selling a 5% stake in the world’s largest oil company. The partial privatisation is the cornerstone of a reform programme spearheaded by Prince Mohammed to diversify the kingdom’s economy and reduce reliance on oil revenues.

The powerful Crown Prince said it was still premature to announce where the IPO will be held, adding that many requirements for the sale to go through had been successfully completed. London, New York and Hong Kong have been vying to host the IPO.

Saudi Arabia has put in place a number of requirements in preparation for the listing including issuing a law for hydrocarbons tax, appointing a new board for Aramco and allowing independent auditing of the kingdom’s oil reserves. Aramco has also opened its account books for the first time to international ratings agencies, declared the size of its profits and transformed into a public shareholding company.

Aramco’s financial performance, revealed in April, was said to have indicated a valuation in the range of $1.2 trillion if investors judge it by the same metrics as other major oil companies such as ExxonMobil, Shell and BP.

Aramco said at the time it had core earnings of $224 billion last year, making it the world’s most profitable company.

The state-owned player, the world’s largest crude exporter, had released its financials before its debut international bond offering, which followed the acquisition of a 70% stake in local petrochemical company Saudi Basic Industries (Sabic) in a deal worth $69 billion.

Aramco raised $12 billion in the bond issue.

Saudi Oil Minister Khalid al-Falih has emphasised that Aramco will continue to have exclusive rights to the country’s upstream assets once the state has sold a minority stake in the oil giant to private investors.

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