Aramco’s IPO cancellation raises question marks

Riyadh – Mubasher: After the big dreams and potentials, to which Saudi Aramco’s announced initial public offering (IPO) gave rise, the global market was shocked by reports regarding the cancellation of the Saudi ambitious plan.

On Wednesday, unofficial sources told Reuters that Saudi Arabia had cancelled its mega IPO for Saudi Aramco, which was considered the largest IPO in history and which valued the whole company at $2 trillion.

Saudi Arabia denied these reports, while its energy minister Khalid Al-Falih said Thursday that “the [Saudi] government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”

The major deal was supposed to play a key role in the Saudi Crown Prince Mohammed bin Salman’s plan to modernise and diversify the kingdom’s economy.

Unfortunately, calling off the IPO will throw all bin Salman’s promises into questions.

The causes behind the cancellation

Some analysts traced back the cancellation decision to Saudi Arabian concerns over the scrutiny and demand-for-transparency by global markets that would follow the IPO.

Others say simply that the crown prince is thinking about the company’s valuation, worried that it may be less than the expected $2 trillion.


The Saudis still have alternatives, as the kingdom planning to offer bonds abroad for the first time, projecting to utilise the giant deal’s consideration to fund the acquisition of the Saudi petrochemicals group Sabic for $70 billion.

Mubasher Contribution Time: 24-Aug-2018 10:32 (GMT)
Mubasher Last Update Time: 24-Aug-2018 14:53 (GMT)