Saudi denies Aramco IPO suspended

Saudi Arabia's energy minister in a statement issued early on Thursday denied a Reuters report that state oil giant Aramco's initial public offering will be called off.

"The government remains committed to the initial public offering of Saudi Aramco, in accordance with the appropriate circumstances and appropriate time chosen by the government," Energy Minister Khalid al-Falih said in a statement released via Saudi Press Agency.

Reuters reported on Wednesday, citing four senior industry sources, that Saudi Arabia had called off Aramco's partial flotation, shelving both its domestic and international listings in what would have been the largest stock listing in history and the cornerstone of Crown Prince Mohammed bin Salman’s economic reform policy, dubbed “Vision 2030”.

Bloomberg reported on Thursday, citing inside anonymous sources, that Aramco is focusing on buying a strategic stake in chemical giant Saudi Basic Industries Corp, putting work on its potential initial public offering on hold.

While the IPO will be delayed, it does not mean the planned share sale is formally cancelled, the sources told Bloomberg, asking not to be identified.

Falih said in his statement on Thursday that the government is committed to the IPO “at a time of its own choosing when conditions are optimum”, which include "favourable market conditions".

Reuters had reported that Saudi Arabia disbanded its team of financial experts working on the project. "The decision to call off the IPO was taken some time ago, but no one can disclose this, so statements are gradually going that way - first delay then calling off," according to a Saudi Reuters source.

The decision to call off the IPO was taken some time ago, but no one can disclose this, so statements are gradually going that way - first delay then calling off

- Source

The crown prince announced the plan to sell off 5 percent of Aramco in 2016, which was slated to be done on Saudi and international stock markets. Riyadh predicted the sale would result in Aramco being valued at $2tn or more in total.

This valuation has been challenged by several industry experts, adding to the uncertainty of the company’s flotation and hindering the process of preparing the IPO for advisers.

Plans laid

Aramco’s proposed flotation made waves across the globe.

The world’s leading stock exchanges – including London, New York and Hong Kong – have been jostling to host the international share of the sell-off.

Meanwhile, bankers, lawyers and financiers have competed for advisory roles, which were seen as a gateway into other lucrative contracts in the oil-rich kingdom.

According to Reuters’ sources, international banks JPMorgan, Morgan Stanley and HSBC were working as global coordinators, boutique investment banks Moelis & Co and Evercore were chosen as independent advisers and law firm White & Case worked as legal counsel.

More were set to be appointed as the scheme gathered steam.

One of the sources, a senior financial adviser, told Reuters: "The message we have been given is that the IPO has been called off for the foreseeable future."

A budget used to pay IPO advisers was financed until the end of June, but has not been renewed, one of Reuters’ sources said.

"The advisers have been put on standby," another source, a senior oil industry official, said.

"The IPO has not been officially called off, but the likelihood of it not happening at all is greater than it being on."