King of Saudi cancels Aramco IPO plans

In late June, Saudi Arabia’s King Salman bin Abdulaziz Al Saud sent a message to his diwan (administrative office) calling off the initial public offering (IPO) plans and the king’s decision is final.

Saudi Arabia’s King Salman has shelved Aramco’s IPO plans following the king’s consultations with family members, bankers as well as senior oil executives which include a former Aramco CEO, reported Reuters.

The King was advised that the IPO would undermine the Kingdom’s economy instead of helping it and their main concern was that it would bring full public disclosure of Aramco’s financial details.

The $100 billion planned listing, which was the brainchild of Crown Prince Mohammed bin Salman, was to be the cornerstone of the kingdom’s promised economic overhaul and was to be the biggest IPO ever.

The Kingdom has been preparing for the past two years to place up to five per cent of its national oil company on the stock market.

The cancelling of the IPO is said to be a major blow to the Crown Prince’s Vision 2030 reform programme, which aims to fundamentally transform Saudi Arabia’s oil-dependent economy, raising doubts about the Kingdom’s management of the IPO process as well as commitment to make the economy more transparent, said Reuters.

In April, Aramco stopped paying some of the banks working on the deal their retainer fee, instead the banks, including JP Morgan as well as Morgan Stanley were invited to pitch present proposals for Aramco’s acquisition of a stake in petrochemicals giant SABIC from the sovereign wealth fund.

The move signalled that listing plans were stalling and that Kingdom was looking to raise funds elsewhere.