Saudi king intervenes and calls off Aramco IPO

/ Policy & Regulations / Sunday, 09 September 2018 07:17

The planned proposal to take Aramco public has been scrapped by King Salman following a number of intense consultations which were held during Ramadan with family members, bankers and senior oil executives.

The project to take Aramco public was the brainchild of Crown Prince Mohammed bin Salman who has spearheaded a number of progressive reforms in the Kingdom since assuming the role of heir apparent. The planned listing was set to be the cornerstone of Saudi Arabia’s economic transformation and would be at the core of the Kingdom’s Vision 2030 program.

The listing was expected to be the biggest IPO ever on the stock market. For the last two years Saudi Arabia has been preparing to place 5% of its national oil company on the stock but that has now been scrapped following months of setbacks and experts advising King Salman not to take the company public.

It is believed that during the consultations, the king’s interlocutors told him that the IPO wouldn’t help the Kingdom - in fact it would only serve to undermine it. Their biggest concern was that an IPO would bring about full public disclosure of Aramco’s financial details.

He has been reported by Reuters that in late June, the king sent a direct message to his administrative office which demanded that the IPO be called off. The source added that the king’s decision is final and when he says no there is no turning back on it.

Following the officially confirmation that the IPO was off, Energy Minister Khalid al-Falih reiterated that the government was committed to conducting the IPO at an unspecified date in the future.

A senior Saudi official echoed the sentiments expressed by the government, and declared that Aramco’s shareholders were working towards an IPO when conditions were right.

"The government continues actively to plan for the IPO. We’re surprised considering the statement we released that some media outlets are continuing to report the IPO plans as being halted.

"Aramco’s shareholder is the Government of Saudi Arabia. His majesty, King Salman, has delegated management of the IPO to His Royal Highness the Crown Prince, and a Committee which includes the Ministers for Energy, Finance and Economy. Therefore, decisions around the nature and timing of the IPO, will be decided by the Committee for the Governments approval," the official said.

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