Skip to main content

Saudi Arabia favours New York for Aramco listing despite risks - sources



Saudi Arabia favours New York for the main foreign listing of state oil giant Aramco, even though some financial and legal advisers have recommended London as a less problematic and risky option, people familiar with the matter told Reuters.

A final decision on where to stage what could be the world's largest initial public offering will be taken by Crown Prince Mohammad bin Salman - or MbS as he is known - who oversees the kingdom's economic and energy policies, the sources said.

Their comments point to internal disagreements between what some advisers are recommending and what the crown prince wants.

Prince Mohammad may choose to list Aramco on the New York Stock Exchange (NYSE) for "political considerations", given the longstanding relationship between Riyadh and Washington, the sources said. 

However, they added that financial and commercial factors would also play a role in the choice.

Aramco said in a statement that no decision has been taken yet on the listing venue, beyond the Saudi exchange Tadawul. 

"All options continue to be held under consideration. 

There is no timetable requirement for an immediate definitive decision," Aramco said in response to a Reuters request for comment.

Selling around five percent of Aramco by next year is a centrepiece of Vision 2030, an ambitious reform plan to diversify the Saudi economy beyond oil which is championed by Prince Mohammad.

Several advisers have recommended London for the main listing outside Saudi Arabia, sources familiar with the matter told Reuters last month, partly due to concerns that a U.S. flotation would require greater disclosure of sensitive information on Aramco.

One senior industry source, however, said New York is likely to be the favoured option for the Saudi government and Prince Mohammad. 

"That is broadly correct," the source said, adding: "All awaits on the final shareholder decision."

Apart from New York and London, Hong Kong is also a contender, sources say. 

The flotation is expected to raise tens of billions of dollars which would be invested to help develop other Saudi industries.

The New York and London stock exchanges declined to comment.

Exchanges are vying to win part of the flotation as it will bring a major boost to their trading volumes, and will be likely to help them win listings from other Gulf states which are looking to part-privatise their commodity assets.

But the Aramco plan has created some public misgivings that Riyadh is relinquishing its crown jewels to foreigners cheaply at a time of low oil prices. 

Some Aramco employees secretly wish the whole idea would be shelved, sources say.

Apart from choosing an exchange, no decision has been made either on exactly which assets will be floated, or what Aramco's internal organisational structure would look like after listing, the sources say.

One of the main issues being discussed internally is the valuation. 

Prince Mohammed has said the IPO will value Aramco at a minimum of $2 trillion, although some analysts' estimates are between $1 trillion and $1.5 trillion.

Though listing on the New York market would mean access to more liquidity, this would bring greater scrutiny to Aramco's estimates of proven energy reserves and future oil prices, as well as its demand forecasts, all of which play a major role in the company's valuation, another industry source said.


For the valuation, much depends on the outlook for oil prices, which are currently only half what they were three years ago.

"That's why Saudi Arabia needs a higher oil price for the IPO now, to get a better value for Aramco," the source said.

The back-and-forth internal talks between the crown prince, Energy Minister Khalid al-Falih, Aramco management and the many financial and legal advisers on some of these main decisions have raised speculation that the listing, which is expected to be in the second half of 2018, could be pushed further out.

"They are still studying. When all is settled, they will present all options to MbS," said one industry source.


JASTA RISK

Aramco's lawyers caution about litigation risks associated with the U.S. Justice Against Sponsors of Terrorism Act (JASTA), two sources said.

That law, passed last September, allowed lawsuits to proceed against the Saudi government claiming it had helped to plan the Sept. 11, 2001 attacks on the United States and should pay damages to victims. Riyadh denies the allegations.

Finance Minister Mohammed al-Jadaan, a lawyer by training, is most attuned to the legal risk of the four senior government officials advising the crown prince on the listing decision, the source said.

Falih, who is also Aramco's chairman, Economy and Planning Minister Adel Fakieh and Public Investment Fund Managing Director Yasir al-Rumayyan are the other members of the crown prince's advisory committee, the source said, without elaborating on their views.

The Finance Ministry did not respond to a request for comment on the views of Jadaan.

Saudi industry sources dismissed JASTA as a reason for not listing in New York, noting that Saudi Arabia is believed to have hundreds of billions of dollars of investments in the United States already, including Aramco assets.

They say the difficulty is related more to the disclosure process and complex regulations in New York. 

These may legally interfere with the sovereignty of the Saudi government, which would remain the major shareholder of Aramco after the flotation.

While the London Stock Exchange has made winning the Aramco listing a priority, the NYSE has not offered any regulatory changes, a source familiar with talks between NYSE and Aramco told Reuters last month.

Britain's Financial Conduct Authority has proposed creating a new "premium" listing category for companies controlled by sovereign states which would exempt them from certain regulatory requirements. 

The new rules are due to be published towards the end of this year.

Comments

Popular posts from this blog

Armenian protesters block traffic, railways & airport as protest leader loses PM bid

Anti-government protesters disrupted traffic in Armenia’s capital, blocking railways and roads leading to Yerevan International Airport, after the parliament voted against opposition leader Nikol Pashinyan’s bid for interim PM.
Protesters managed to block streets connecting downtown Yerevan to residential districts, disrupting transportation in Armenia’s capital, footage from the scene shows. 
Yerevan’s metro system has also been paralyzed as demonstrators sit on the tracks, preventing trains from passing.
Meanwhile, protesters disrupted traffic on a road leading to Yerevan’s Zvartnots International Airport, located just 12km from the center of the city. 
Consequently, some passengers had to go the rest of the way on foot in order to catch their flights, according to Sputnik news agency.
Railway services have also been disrupted all across the country amid the demonstrations, a spokesman for South Caucasus Railways confirmed to Interfax. 
Some other highways, including the one connecting th…

Iran Killing Command: The use of firearms in dealing with protesters

The document you see on the image is the order of the commander of the Tehran repressive force to all the units based in the city.

Based on this agenda, the mercenaries of the corrupt government Islamic Republic of Iran have been allowed to use firearms in the event of any protest movement against people by the regime.
This is a murder command.
The repressive force of the law, known to the world's famous police and guardians, should protect the lives of its citizens, by freeing their mercenaries, they allow them to murder Iranians who are protesting the corruption in the government and you have the important message that if you come to the streets in protest of corruption and torture and massacre, we will kill you.
Because, according to criminal Khomeini, maintenance of the system is obligatory.
A corrupt government that is so hideous that spend billions of dollars from the national treasury and popular capitalto the suppression of its people and the countries of the region, must be ov…

ایران فرمان قتل : دستور استفاده از سلاح گرم در برخورد با معترضان

سندی که در تصویر میبینید دستور فرمانده نیروی سرکوبگر انتظامی تهران به همه یگانهای مستقر در این شهر است.
بر اساس این دستور کار ، مزدوران حکومت فاسد نظام جمهوری اسلامی اجازه یافته اند که درصورت بروز هرگونه جنبش اعتراضی از سوی مردم علیه رژیم ، از سلاح گرم استفاده کنند.
این دستور یک فرمان قتل است.
نیروی سرکوبگر انتظامی که به ظاهر و تعریف شناخته شده پلیس در سراسر جهان ، میبایست حافظ جان شهروندان باشد ، با آزاد گذاشتن دست مزدوران چکمه پوش خود انها را مجاز به قتل ایرانیان معترض به فسادهای موجود درلایه های حکومت میکنند و این پیام مهم را در خود دارد که اگر در اعتراض به  فساد و شکنجه و کشتار به خیابانها بریزید شما را خواهیم کشت.
چرا که به گفته خمینی دجال، حفظ نظام از اوجب واجبات است.
حکومت فاسدی که انقدر وقیح هست که میلیاردها دلار از خزانه ملی و سرمایه مردمی را صرف سرکوب مردم خود و کشورهای منطقه میکند باید سرنگون کرد.
اکنون چهل سال است که کشور ما به اشغال این ملایان جنایکتارخونخوار و اسلام تحمیلی در آمده است .
هنوز باورش برای برخی سخت است که درک کنند کشور ما به معنای واقعی کلمه از سوی بنیادگرایان الله…