Oil giant Aramco’s most bragged stock market listing announced a delay. This is after deal advisers said they need more time to lock in cornerstone investors, according to the Reuters.
Preparations huddled momentum this summer with approaches to sovereign wealth funds, after a false start last year. Rich Saudis and prominent foreign fund managers as possible cornerstone shareholders plan to solve for a second.
The world’s most prominent oil firm expected to launch the domestic sale of a 1-2% stake. Contrarily, the signing up of marquee backers hampered by continuing valuation concerns infuriate by recent attacks.
Aramco is not able to answer valuation questions fully during initial talks with shareholders.
Sovereign funds in the oil-rich Gulf region usually shy away from energy exposure. Also, by just looking at their investment portfolio to diversify.
A Saudi government committee managing the planned Aramco support had recommended to Crown Prince Salman. Besides, the launch of an initial public offering (IPO) scheduled for Oct. 20 will postpone.
Saudi Arabia’s chief of sovereign fund PIF heads the committee, which includes senior Saudi officials. Also, he is the newly appointed chairman of Aramco.
Aramco refused to comment, and the Saudi government media office did not reply o a request for comment.
The kingdom’s de facto ruler, the prince, made the Aramco IPO a pillar of an ambitious economic reform drive. He wants the firm to value at about $2 trillion, although bankers and firm insiders put the value nearly $1.5 trillion.
Moreover, banks involved in the offering received news of the delay. An email from tip advisers says a call with bankers discusses the strategy to secure shareholders canceled on Sunday launch. This is according to a banker who read the email.
The excuse was that third-quarter results, which could come before the end of October.
Oil Anchor Investors
Abu Dhabi’s sovereign wealth fund, Singapore’s GIC, and other funds were where talks took place, according to a source.
Al-Rumayyan is pushing banks to accomplish the top valuation, said by a source familiar with the IPO plan.
Postal Savings Bank of China in 2016 sold 77% of its $7.4 billion IPO to different backers. Also, Anchor, or cornerstone investors such sovereign wealth funds are considering to be a key to secure demand.
According to a source, Aramco will want anchor investors to cover no less than 40% of the offering. Anything below that will not be enough.
The latest delay in the plan to conduct what could be one of the world’s most extensive public offerings revived the debate on whether Saudi Arabia can realize its valuation target. Also, it’s potentially raising upwards of 20 billion from the sale of 5% of Aramco in total.
Steffen Hertog said the current oil price environment is not agreeable for the $2 trillion targets. He is an associate professor at the London School of Economics.
Aramco is expecting the oil market to recover over the coming several years. Also, another longer delay would, however, test the patience of the market. Besides, the topics will not be ideal.