Written by Javier Blas. This article first appeared in Bloomberg Markets.
Saudi Arabia is still aiming to complete both international and domestic portions of the initial public offering of its state oil company in 2018, Oil Minister Khalid Al-Falih said Tuesday.
Asked whether both parts of the IPO will happen next year, Al-Falih said: “Yes of course; it is on track.” He declined to answer questions on whether Chinese investors were interested in buying ahead of the IPO as cornerstone investors.
People familiar with the situation said last week that the kingdom is wondering whether to delay the international portion of the offering until at least 2019. A two-stage Saudi Aramco IPO is one of several options being considered, they said, asking not to be identified because discussions are private. Another plan would include listing in Riyadh next year and privately selling a stake to one or several cornerstone investors, one of the people said.
There’s a precedent for bringing in such investors before a large commodities IPO. In 2009, Glencore Plc sold a stake through a convertible bond ahead of its 2011 offering, still the largest in London, where the company raised almost $10 billion.
The Saudi government has said the sale of 5 percent of Aramco shares could value the company at as much as $2 trillion, though analysts have tended to give lower estimates. If Saudi Arabia achieves its valuation, that stake would raise about $100 billion, eclipsing Alibaba Group Holding Ltd.’s $25 billion in 2014.
The IPO is the centerpiece of a broad-ranging economic reform program proposed by Crown Prince Mohammed bin Salman, the dominant political force in the kingdom. Any delay would be a setback to his plans and to the plethora of international investment banks and exchanges eyeing millions in fees and commissions.
Exchanges in London and New York are vying for a role in Aramco’s IPO, with Hong Kong, Singapore, Tokyo and Toronto also trying to attract the sale.
“We will announce the venue in due course,” Al-Falih said in London, where he was attending the annual dinner of the Oil & Money conference.