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Aramco is worth an implied $1.107 trillion, according to Bloomberg
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1. Decision on the exchange: The debate over which international exchange should be the venue for the listing has yet to be resolved. With Saudi energy minister Khalid Al Falih suggesting the litigation risks that come with New York would be prohibitive, London and Hong Kong are now favourites – although the financial disclosures will not be easy – or even comfortable – for Aramco to navigate. There are also doubts as to investor appetite, with the $2tr estimate seen as ambitious.
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2. Impending emerging market status: Saudi Arabia is now awaiting the decision – due in June – as to whether MSCI will grant the Tadawul exchange emerging market status. If it does, the new classification would be in two steps, in the months of May (possibly June) and August of 2019. Some experts have suggested that the new status might be a reason to push against an international listing in light of the capital inflows – which could be as much as $68bn – that the exchange would then attract.
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3. Rising oil prices, access to credit: Part of Saudi’s reform agenda has been capital investment in diversification projects, particularly in areas such as manufacturing, energy, tourism and technology. With oil prices rebounding to close to $70 a barrel and money still freely available on the bond market, the urgency of an Aramco IPO in the next 12 months seems to be receding. The Saudi government has recently listed more than $53.3bn in 45 bonds and sukuks on the local market.