Saudi Tadawul expected to be ‘main market’ for Aramco IPO, says regulator

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The Saudi Stock Exchange (Tadawul) is expected to be the main market for Saudi Aramco’s upcoming listing, Capital Market Authority (CMA) Chairman Mohammad ElKuwaiz said on Wednesday.

“The market’s readiness for the listing is our priority, particularly since it is going to be a large listing,” ElKuwaiz told Al Arabiya.

Tadawul, the Middle East’s largest stock market, has recently completed the second and final phase of joining the global index provider MSCI’s Emerging Markets Index.

It has also been included on global index and analytics provider FTSE Russel’s Secondary Emerging Market Status, for which it will complete its fourth phase of inclusion on Thursday, ElKuwaiz said. The inclusion is taking place in a five-tranche process.

Procedures to ensure the Tadawul’s readiness for the upcoming initial public offering (IPO) began a while ago, and many of the obstacles have been removed, he noted, adding that this included opening up the market and joining global indexes, such as MSCI and FTSE Russel.

He said the Kingdom’s market regulator has been working to ensure that Tadawul is prepared to handle Aramco’s considerably large listing, and that market is now in a “good place” to welcome the IPO.

Capital market reforms and economic liberalization are core components of Saudi Arabia’s Vision 2030 diversification plan that aims to wean the economy off its reliance on oil.

ElKuwaiz told Al Arabiya that the market has witnessed more than 75 billion riyals of foreign investments since the beginning of this year, which came as a result of the market’s inclusion on MSCI and FTSE.

The Tadawul expects 4.6 billion riyals in passive inflows after its fourth phase of inclusion on FTSE.

Saudi Aramco is preparing to float a five percent stake in 2020-2021 to raise $100 billion, which will value it at nearly $2 trillion in what could be the world’s biggest IPO.

Amin Nasser, chief executive officer of Aramco, said earlier that the company is “ready” for the IPO. He confirmed it would be a two-stage listing process, and flagged a possible foreign listing as part of the offering.

Some of the international destinations vying for the listing include Tokyo, London, Hong Kong, and New York.

Aramco’s chairman Yassir al-Rumayyan said on Tuesday that the planned IPO of the state oil company will be ready within the coming 12 months and that the Kingdom was committed to the listing.

His comments came after Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the Kingdom had managed to return oil supplies to levels comparable prior to Saturday’s aerial attacks on Aramco’s Abqaiq and Hijrat Khurais oil-processing facilities.

The attacks on Aramco had temporarily interrupted the output of an estimated 5.7 million barrels of crude oil per day — around five percent of global supply and 50 percent of Saudi Arabia’s daily oil production.

Prince Abdulaziz said that Saudi Arabia will maintain full oil supply to its customers this month, while oil production capacity will rebound to 11 million barrels per day by the end of September.

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