Oil giant is discussing plans for what would be the largest share sale ever, with a secondary listing possible in London, Singapore or other venues

By Summer Said and Julie Steinberg/WSJ

DUBAI/LONDON
EnergiesNet.com 02 07 2022

Saudi Arabia has restarted plans to list more shares of Aramco, the world’s most valuable oil company, according to people familiar with the company’s strategy, with an ambition to sell as much as a $50 billion stake, which at current valuations would be 2.5% of the company.

Executives at state-owned Saudi Arabian Oil Co., as Aramco is known, have held discussions internally and with outside advisers about selling additional shares on the Riyadh stock exchange and a secondary listing, possibly in London, Singapore or other venues, the people said.

The listing of shares would be by far the largest in the history of capital markets and could prove difficult to pull off. The company set the previous record for the world’s largest initial public offering in 2019 when it raised $29.4 billion on the Tadawul, or the Saudi stock exchange.

The stake-sale effort is still in the planning stage, and could still be delayed or changed, the people said. Riyadh has floated several different plans over the years aimed at raising funds via Aramco, some of which have ultimately faltered or been abandoned.

The 2019 listing was a scaled-back version of the company’s original ambitions, which were to sell 5% of the company for as much as $100 billion, including on a major international exchange. But international investors were wary of governance issues and the price of the shares, which valued the company at $1.7 trillion. The domestic-only IPO ultimately listed 1.5% of the company.

A spokesperson for Aramco declined to comment.

Saudi Arabia has long wanted to sell off chunks of the oil giant, part of a strategy crafted by de facto leader Crown Prince Mohammed bin Salman to monetize the country’s massive oil assets and use the proceeds to invest in industries outside of oil.

The goal is to complete the share sales by the end of the year or early next year, one of the people said. The plan is being pushed by the crown prince, the person said.

In April 2021, Prince Mohammed said in a televised interview that the kingdom was in talks with unnamed foreign investors about selling stakes in Aramco, with options that included a 1% acquisition by a leading global energy company. Plans under deliberation included selling more shares in Riyadh and that an announcement would come in a year or two.

Discussions over a fresh share sale are happening as oil prices hit their highest level since 2014, powered by rising demand, curtailed supplies and concerns among traders over instability in Eastern Europe and the Middle East. Brent crude, the global benchmark, traded above $92 a barrel Friday and has risen 57% over the past year.

Saudi Aramco’s Riyadh-listed shares have edged higher along with the price of oil and other oil-major stocks in recent months, and currently sport a market capitalization of nearly $2 trillion. The company’s shares are lightly traded compared with those in Western markets and aren’t widely owned by international investors. It is unclear if the company’s current valuation inside the country could be achieved in bigger markets.

Even if the company went ahead with a smaller share sale, it could still be a significant test for the company and oil markets.https://deca700da5101e3a7faaf6d9210d0281.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

London is the preferred location for that listing, one of the people said. The company has been talking to investors there to gauge their receptiveness for a listing, the person said. The kingdom has also revived plans from the last IPO to try to bring in investors from China, some of the people said, but nothing has been decided.

Some of the people close to the company said it is trying to cash in while investors still have an appetite for oil-related assets in a rapidly decarbonizing world. Distaste toward oil assets is growing as more investors factor in environmental criteria that determine how they allocate their funds. Aramco is the world’s fourth most-profitable public company after Apple Inc., Google parent Alphabet Inc. and Microsoft Corp.

The company has been wringing value from other parts of its energy infrastructure. In December it agreed to sell a 49% stake in its natural-gas pipeline business to a consortium led by BlackRock Inc. and Saudi-backed Hassana Investment Co. for $15.5 billion.

Summer Said at summer.said@wsj.com and Julie Steinberg at julie.steinberg@wsj.com

Appeared in the February 5, 2022, of the Wall Street Journal-WSJ print edition as ‘Saudis Plan $50 Billion Stock Sale In Oil Giant.’