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Thu 22 Dec 2016 01:27 PM

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Saudi Aramco listing 'to boost corporate transparency'

Huge IPO would place kingdom ‘on global map of reform’, analyst says

Saudi Aramco listing 'to boost corporate transparency'
Amin Nasser, CEO of Saudi Aramco.

Saudi Aramco’s initial public offering (IPO), slated for launch in early 2018, is expected to improve corporate transparency in the kingdom, entice additional foreign money into other Riyadh-listed stocks and overall improve the country’s global standing, an analyst told local media.

The IPO, announced by Saudi Arabia’s deputy crown prince Mohammed bin Salman earlier this year, would involve floating less than 5 percent of Aramco’s shares and is expected to raise as much as $100 billion.

John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh, was quoted as telling Arab News: “The Aramco IPO is not just going to help make the company more transparent but will also help the country become more transparent.”

He added: “The economic impact is beyond just attracting foreign investors in the local market but also placing Saudi Arabia on the global map of reform, diversification and progress.”

However, Fitch Ratings wrote in a September note that supplied a negative outlook for Saudi Arabia’s economy overall: “Obstacles in terms of transparency, depth of local markets and reservations about governance remain large.”

Saudi Aramco is expected to float shares in the entire company, not just its refining or distribution units, its CEO Amin Nasser told Bloomberg in October.

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R Kamat 3 years ago

This is a healthy development. However, markets would look to each action carefully and consistency in disclosures, already in public domain and that which will be made available. Sooner, it is better, rather than do it closure to the IPO. Crdiebility will be added when the company goes beyond the regulatory requirements.