Saudi Aramco’s listing is unlikely to go ahead this year, according to British officials who have been warned by their Saudi counterparts that the world’s biggest flotation was expected to be delayed.
Several people briefed on the talks said London still had a good chance of securing the listing, which Riyadh said could value the state energy company at $2tn, but any foreign flotation was likely to happen in 2019 at the earliest.
Saudi Arabia wants to sell 5 per cent of the world’s largest oil-producing company as part of an economic reform programme driven by Mohammed bin Salman, the crown prince, who visited the UK last week.
The kingdom had targeted a late 2018 listing, with shares to be sold on Saudi Arabia’s Tadawul exchange. But preparedness for the offering and willingness for a simultaneous or sequential flotation on a foreign exchange has been questioned.
Delays on IPO decision making came as advisers struggled to achieve the $2tn valuation that Prince Mohammed wants. Saudi Aramco’s finances and internal operations have been shrouded in secrecy for decades and its close relationship with the state has raised financial, legal and regulatory challenges.
UK officials said that if Riyadh decided to list abroad they expected a domestic and foreign listing to take place around the same time. One person close to the talks said this could take place in the first or second quarter of 2019.
London, New York and Hong Kong are among foreign bourses competing for the share sale. A private sale to strategic investors has been another option under consideration.
Saudi officials have been split on where to list. Prince Mohammed, ultimate head of the kingdom’s oil affairs, has ambitions to list in New York and is hoping US officials will make regulatory concessions to pave the way for a deal there when he visits this month.
But senior ministers and Saudi Aramco executives have said privately that London might be a better fit.
Khalid al-Falih, the energy minister, told CNN last week: “I would say litigation and liability are a big concern in the US . . . Saudi Aramco is too big and too important to be subjected to that kind of risk.”
Bankers have said people close to the royal court are trying to carve out an alternative solution in Asia, where the kingdom could list in Hong Kong and cornerstone investors in China could have a big role.