Saudi Aramco's IPO Delay Carries Silver Lining

Aramco delays IPO and focuses on acquisition of stake in Sabic

- Wael Mahdi, Javier Blas and Filipe Pacheco

Saudi Arabian Oil Co. has put work on its potential initial public offering on hold as it focuses on buying a strategic stake in chemical giant Saudi Basic Industries Corp (Sabic), according to people familiar with the matter.

While the move will further delay the IPO, it does not mean the planned share sale is formally cancelled, the people said, asking not to be identified because the matter is private. Aramco, as the company is known, wrote to some but not all of its advisers on the IPO and asked them to suspend work for now, one of the people said.

The kingdom’s energy minister, Khalid al-Falih, said in an emailed statement on August 23 that the government is committed to the IPO “at a time of its own choosing when conditions are optimum.” The timing depends on multiple factors, including favourable market conditions and a downstream acquisition that the company will pursue in the  next few months, he said.

Al-Falih’s statement came after Reuters reported earlier that Saudi Arabia had called off the domestic and international listing and disbanded its financial advisers, citing four uneridentified industry sources.

The Aramco IPO has been a centrepiece of Saudi Crown Prince Mohammed bin Salman’s reform programme to diversify the country’s economy away from oil. Chief Executive Officer Amin Nasser said in July that a Sabic deal would affect the time frame for the IPO.

The IPO process started in January 2016, when the crown prince said Riyadh was considering selling shares in Aramco, kicking offa deal set to be the world’s largest-ever flotation.