Aramco delays planned IPO until after earnings update: report

October 18, 2019 09:57
Aramco is said to aiming to reassure investors with its third-quarter results before proceeding with a share sale. Photo: Reuters

Saudi Aramco has delayed the planned launch of its initial public offering in hopes that pending third-quarter results will bolster investor confidence in the state oil giant, Reuters reports, citing sources familiar with the matter.

Aramco had been expected to announce plans next week to float a 1-2 percent stake on the kingdom’s Tadawul market, in what could have been one of the largest ever public offerings, worth upwards of US$20 billion.

However, after a Sept. 14 attack on its Abqaiq and Khurais plants temporarily knocked out half its crude output, the world’s top exporter wants to reassure investors by first presenting results covering the period, the report said.

“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” a source told Reuters.

A second source confirmed that the offering had been postponed, and there is currently no new date set for the listing, the report said.

The Financial Times, which initially reported the IPO delay on Thursday, cited a source as saying that the listing has been delayed by “weeks”.

The prospect of Aramco selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed bin Salman first flagged it three years ago.

However, his desired US$2 trillion valuation has always been questioned by some financiers and industry experts who note that countries have been accelerating efforts to shift away from fossil fuels to curb global warming, putting oil prices under pressure and undermining producers’ equity value.

Then came the September attack, which initially knocked out 5.7 million barrels per day of production, or more than 5 percent of global oil supply.

Aramco executives have insisted since the attack that it would have no impact on its plans to list the company. The full restoration of oil output as declared by Energy Minister Prince Abdulaziz bin Salman on Oct. 3 - at a faster clip than expected - was seen boosting the company’s image.

“The official line was that the Q3 results were very good, so they want to update the analysts and market the IPO after the Q3 numbers,” Reuters cited one if its sources as saying.

Aramco halted plans for a blockbuster international listing of around 5 percent last year amid debate over where to list overseas, but talks resumed this summer.

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