Riyadh – Mubasher: Saudi Arabia has called off its mega initial public offering (IPO) of Saudi Aramco, which had been billed globally as the largest IPO in history.
The announcement, though unofficial, came after several delays by the company and the Saudi government. The IPO date had originally been set for early 2018, moved to the end of the year then later postponed to sometime in 2019.
Now industry sources have told Reuters that the IPO, both the local and international listings, have been cancelled as the leading Saudi oil firm refocuses on purchasing a stake in a top petrochemicals company, the Saudi Basic Industries Corp (SABIC).
“The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way - first delay then calling off,” an informed Saudi source, familiar with IPO plans, told Reuters on Wednesday.
Moreover, the financial advisors previously appointed to advise the Saudi Aramco, known formally as Saudi Arabian Oil Co., on the deal have been "disbanded", the sources added.
The Aramco listing was deemed part of Saudi Crown Prince Mohammed bin Salman's scheme to divert the Saudi government's revenues away from oil. The Crown Prince had first announced plans about the IPO in 2016.
A 5% stake in Saudi Aramco, which was the stake touted for the IPO, was seen as the largest IPO in history. It also valued the whole company at around $2 trillion.
"Several industry experts however questioned whether a valuation that high was realistic, which hindered the process of preparing the IPO for the advisors," according to the news agency.
International banks including JPMorgan, Morgan Stanley, and HSBC were among the financial advisors appointed to the deal. However, no official bookrunners were announced.
“The message we have been given is that the IPO has been called off for the foreseeable future,” one of the sources, a senior financial advisor, told Reuters.
Stock exchanges across the world have been in talks with Saudi and Aramco officials over the past year or more over the international tranche of the listing. Such exchanges include the London Stock Exchange (LSE), the New York Stock Exchange (NYSE), and the Hong Kong bourse.