Doubts over Aramco IPO

Doubts over Aramco IPO

Saudi Arabia’s plans to list its state-owned oil giant, Saudi Aramco, in a bid to end its reliance on oil could come to a grinding halt as preparations have stalled, which has resulted in officials and those close to the process doubting it will happen at all.

The initial public offering (IPO) was expected to raise $100 billion dollars in exchange for 5% of the national company, believed to be listed on either London or New York.

However, after two years of preparation, doubts have risen over the IPO that would also bring a significant level of scrutiny to the Kingdom’s most valuable asset.

The final date of the deal has also been pushed back a number of times since first being proposed by Crown Prince Mohammed bin Salman in January 2012.

Government officials have said that Aramco executives and outside advisers have becoming increasingly vocal about issues that could arise from listing the company, such as the increased risk of shareholder lawsuits.

Despite the internal opposition to the IPO, the decision ultimately rests on Prince Mohammed who sees the floatation as a pillar of a more modern, market orientated kingdom.

Oil prices have doubles to nearly $80 a barrel since the idea was first put forward and there is a shortage of supply from Iran, Venezuela and Libya, which means there is no pressure to make an immediate decision as Saudi Arabia can enjoy increased levels of output at high prices.

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