Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Aramco listing was delayed to rope in anchor investors: sources

Stock Markets Oct 22, 2019 12:52PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

By Hadeel Al Sayegh, Marwa Rashad and Rania El Gamal

DUBAI/RIYADH (Reuters) - Oil giant Saudi Aramco's much-vaunted stock market listing was delayed after deal advisers said they need more time to lock in cornerstone investors, three sources with direct knowledge of the matter told Reuters.

After a false start last year, preparations gathered momentum this summer with approaches to sovereign wealth funds, rich Saudis and large foreign fund managers as potential cornerstone investors only for plans to unravel for a second time.

The world's biggest oil company had been expected last week to launch the domestic sale of a 1-2% stake, but the signing up of marquee backers has been hampered by continuing valuation concerns exacerbated by recent attacks on Aramco's Abqaiq and Khurais plants.

Aramco was unable to answer valuation questions fully during initial talks with investors, said one Gulf institutional investor who has been involved in the discussions.

Sovereign funds in the oil-rich Gulf region typically shy away from energy exposure, he added, looking to diversify their investment portfolio.

Two of the sources said that an Aramco committee overseeing the planned flotation had therefore recommended to Crown Prince Mohammed bin Salman last Wednesday that the launch of an initial public offering (IPO) scheduled for Oct. 20 be postponed.

The prince, the kingdom's de facto ruler, has made the Aramco IPO a pillar of an ambitious economic reform drive. He wants the company to be valued at about $2 trillion, though bankers and company insiders put the value closer to $1.5 trillion.

Aramco declined to comment and the Saudi government media office did not respond to a Reuters' request for comment.

Banks involved in the offering received news of the delay on Thursday evening. An email from top advisers said that a call with bankers on Friday to discuss strategy to secure investors was canceled, as was the Sunday launch, said one banker who saw the email.

The rationale was that third-quarter results, which one of the sources said could come before the end of October, would bolster investor confidence after the Sept. 14 attacks initially halved Aramco's output and shook oil markets.


Talks have taken place with Abu Dhabi Investment Authority, Singapore's GIC and other funds, sources have told Reuters.

Newly appointed Aramco chairman Yasir al-Rumayyan, who also heads Saudi wealth fund PIF, is pushing banks to achieve the top valuation, said a fourth source familiar with the IPO plan.

Anchor, or cornerstone, investors such sovereign wealth funds are considered key to secure demand. In 2016 state-owned Postal Savings Bank of China sold 77% of its $7.4 billion IPO to such backers.

"They (Aramco) will want anchor investors to cover no less than 40% of the offering. Anything below that won't be enough," said one of the three sources close to the deal.

The latest delay in the plan to hold what could be one of the world's largest public offerings -- potentially raising upwards of $20 billion from the sale of 5% of Aramco in total -- has revived debate on whether Saudi Arabia can ever realize its valuation target given moribund oil prices.

"The current oil price environment is not favorable for the $2 trillion target," said Steffen Hertog, associate professor at the London School of Economics.

"Aramco expects the oil market to recover over the coming few years. Another longer delay would, however, test the patience of the market; the optics would not be ideal."

Aramco listing was delayed to rope in anchor investors: sources

Related Articles

Former Deutsche Bank co-CEO Anshu Jain dies
Former Deutsche Bank co-CEO Anshu Jain dies By Reuters - Aug 13, 2022 10

(Reuters) -Anshu Jain, a top finance executive best known for helping German lender Deutsche Bank AG (NYSE:DB) take on the largest Wall Street firms, died overnight on Saturday...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Hank Williams
Hank Williams Oct 22, 2019 1:24PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They like catching the falling knife. Would love to hear the sells pitches being made.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email