By: Mahmoud Salah El Din
Riyadh – Decypha: Experts and investors around the world are awaiting Saudi Aramco’s announcement of its initial public offering (IPO), which will likely take place sometime in 2018. In the meantime, the oil giant has been expanding both geographically and strategically by diversifying its investments in a number of fields.
Several analysts have called on the Saudi government to keep Aramco’s IPO in the Saudi market and limit it to Saudi investors, at least in the first stage.
The Saudi government announced last year that it was considering offering 5% of Aramco and said it may offer the IPO in a global bourse or in several bourses.
Commenting on the oil company’s latest deals, economy professor at King Abdulaziz University Osama Al-Fulaly highlighted that due to Aramco’s size, its projects require significantly long studies.
The company recently announced several deals in the petrochemicals and renewable energy sectors, including an agreement with Malaysia’s Petroliam Nasional (Petronas) in February to invest $7 billion in the company’s project in the southern state of Johor.
Many large eastern markets, such as China, Japan, India, and Malaysia, would be interested in taking part in Aramco’s IPO, especially as these markets tend to have a high demand for oil and its derivatives.
Meanwhile, Abdullah Ba’shan, CEO at TeamOne Consulting, noted that Aramco’s diversification of its investments is normal. The company’s strategy also involves expansions in the natural gas segment through its transformation plan until 2020, he added.
Earlier in March, Aramco received the first-of-its-kind licence in the Kingdom, from the Electricity & Co-Generation Regulatory Authority (ECRA), to generate electricity using wind turbines and renewable resources.
On Tuesday, Reuters reported that the US unit of Royal Dutch Shell Plc, Shell Oil Co, said it was likely to divide the refineries and other assets of its Motiva Enterprises venture with co-owner Saudi Aramco in the second quarter of 2017.
Al-Fulali told Decypha that he is in favour of Aramco’s planned IPO and transforming it into a joint stock company; however, he said he would prefer it being offered to Saudi investors only, and perhaps to non-Saudi investors if the former do not cover the IPO subscriptions.
Meanwhile, Ba’ashan told Decypha that he hopes a part of the IPO would be done in the Saudi market in order to “deepen” the market and attract investors.
Hamid Idrisi Kholqy, a member of the international business councils, concurred with the two experts in a comment to Decypha via phone, adding that he would like to see the oil giant’s IPO benefit the local and national market.
“Aramco’s offering will be largest historic IPO in the world,” the expert said.
Translated by: Nada Adel Sobhi
