Saudi Aramco IPO to go ahead by 2021, vows Crown Prince

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Saudi Arabia’s crown prince Mohammad bin Salman Al Saud said in an interview with Bloomberg, that plan to sell shares in oil giant Aramco will still go ahead, promising an initial public offering by 2021, stressing that the state-run company is worth $2 trillion or more.

The ambitious crown prince said: “I believe late 2020, early 2021,” in reference to the timing of the IPO of the oil giant company Aramco.

The crown prince interview with Bloomberg took place at the royal palace in the Saudi capital Riyadh late Wednesday.

Mohammad bin Salman added that “The investor will decide the price on the day. I believe it will be above $2 trillion. Because it will be huge.”

The IPO project was first announced in 2016 as the cornerstone of the prince’s Vision 2030 plan to modernize the Saudi economy.

Saudi crown prince said the IPO was “100 percent” in the nation’s interest.

“Everyone heard about the rumors of Saudi Arabia canceling the IPO of Aramco, delaying that, and that this is delaying Vision 2030,” he said. “This is not right.”

Crown prince Mohammad bin Salman said the IPO’s delay had its origin in mid-2017, when it became clear that Aramco needed a push into petrochemicals. He said it would had been unfair to go ahead with the listing only to surprise investors soon after with a big deal in chemicals.

Crown Prince Mohammad bin Salman said he hoped to raise a record $100 billion by selling a 5 percent stake, dwarfing the previous record, set in 2014, when Chinese retailer Alibaba Group Holding Ltd. raised $25 billion.

Furthermore, the crown prince said the deal between Aramco and Sabic, which he hopes will close next year, was key for the future of the country’s energy industry. The state-owned company can pull it off easily due to its low debt, he said.

“If we want to have a really strong future for Aramco after 20, 30, 40 years from today, Aramco has to invest a lot in downstream because we know that the new demand for oil 20 years from now, it will be from petrochemicals,” he said.

If Aramco had developed a separate petrochemical business, Sabic would have definitely suffered, crown prince Mohammad bin Salman said, partly because Aramco provides Sabic with the bulk of the fuel it processes into chemicals.

The Saudi crown prince said that the Saudi government will keep the shares of Aramco after the IPO, rather than transfer them into the sovereign wealth fund as originally planned. Instead, the PIF will receive the $70 billion from the sale of its stake in Sabic, plus the $100 billion that country hopes to raise from the Aramco IPO.

He added: “So PIF is good, the economic plans in Saudi Arabia is good, and that deal is good for the downstream industry in Saudi Arabia,” referring to the Aramco-Sabic deal.

Saudi crown prince provided a detailed timetable of his plans for Aramco, saying that after the Sabic deal is completed in 2019, the company would need a full financial year before it can go ahead and sell shares to the public.

“So the deal in 2019, one financial year in 2020 and then immediately Aramco will be IPO-ed,” he said late Wednesday. “We’ve tried to push to IPO it as soon as possible, but this is the timing, based on the situation that we have.”

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