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Thu 19 Apr 2018 10:51 AM

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Video: Why the Aramco IPO won't happen until 2019 at the earliest

The debate over which international exchange should be the venue for the listing has yet to be resolved.

Saudi energy minister Khalid Al Falih has suggested the litigation risks that come with New York would be prohibitive, so 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 $2trn estimate seen as ambitious.

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.

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.

In this edition of Inside AB Eddie Taylor and Shayan Shakeel run through the issues delaying the IPO of the world’s most valuable company.

(Source: YouTube channel)