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Aramco IPO: 2018 listing still unconfirmed, investment bankers on edge

Written by Remo Bebié

The kingdom and its advisers remain stuck on where to list Saudi Aramco’s shares: At and around the Davos summit there has been a lot of talk about the planned Saudi Aramco IPO. Just before Davos kicked off, Aramco CEO Amin Nasser said the company was ready for the IPO but that it was waiting for the government to determine the listing venue (Bloomberg,18 Jan). The oil giant has also changed its legal status, in line with other Saudi corporations - a concrete step towards a stake sale, sources say. (FT, 4 Jan). In an interview a couple of days later, Amin Nasser was unable to confirm that the listing would happen in 2018 (Bloomberg, 24 Jan). At the summit, John Tuttle of the New York Stock Exchange (NYSE), took a swipe at his London rivals, stating that the United States were not “bending over backwards to accommodate any specific company” (Reuters,23 Jan). Meanwhile, Charles Li, head of the Hong Kong Stock Exchange (HKEX), said that a listing of Saudi Aramco at HKEX would be “a match in heaven” (FT, 24 Jan). Russian pension funds may also back the IPO in a move to strengthen OPEC ties (Reuters, 23 Jan). But Kirill Dmitriev, head of Russia’s Direct Investment Fund, also stressed that due to Russia’s significant existing positions in the oil business, it was “hard to expect [them] to take a very significant stake during the IPO”.

The Wall Street Journal reports that people working on the IPO are getting frustrated with the lack of progress. Several investment bankers told the WSJ that they were struggling to keep staff on the project. Many are also concerned the IPO will never happen or that it would raise much less than expected (WSJ, 28 Jan). Earlier in January, it was reported how investment banks’ advisory roles on the IPO may also be tied to loans (Reuters, 16 Jan). The piece came with a useful overview of fees generated by various investment banks from lending activities to Aramco, which it says are closely correlated to loans made.

Meanwhile, the UK Financial Conduct Authority delayed a rule change for Saudi Aramco’s $2 trillion listing (The Times, 1 Jan). The Financial Conduct Authority had launched a consultation last July on a proposal to create a new category of premium listing for companies controlled by sovereign powers. This would incentivise Saudi Arabia to choose London as the main international venue for the Aramco IPO. The authority had said that it would publish its new rules by the end of 2017, but the regulator is still considering consultation responses.

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