Saudi Aramco IPO Plans Progressing But Key Challenges Lie Ahead

Saudi Aramco’s IPO will be historic, but no easy feat to pull off. The company’s sheer size and intertwining with state finances leave many key issues to be resolved ahead of a planned listing – notably concerning its oil reserves, tax regime and listing location. These make the planned 2018 timeframe ambitious.

Ever since Saudi Arabia’s Deputy Crown Prince Muhammad bin Salman captured the world’s attention in April 2016 by announcing plans to float up to a 5% stake in prized state oil giant Saudi Aramco, industry participants and observers have hung on every new detail to have emerged.

As the world’s largest oil exporter, the part-sale of Aramco has the potential to be the biggest IPO in history. It forms the centerpiece of Riyadh’s ambitious ‘Vision 2030’ plans to end the country’s “addiction to oil” ( MEES, 29 April 2016 ).

Prince Muhammad last year estimated Aramco’s value at $2-3 trillion, implying that a 5% listing could raise $100-150bn, dwarfing the $25bn secured by Chinese internet retailer Alibaba in the world’s largest IPO in 2014 ( MEES, 11 November 2016 ). (CONTINUED - 2887 WORDS)