Saudi Aramco flotation may be pushed back until 2019
(ShareCast News) - Efforts to float a stake of Saudi Arabian state oil firm Saudi Aramco have been stunted, with the date of potentially world's largest ever IPO being pushed back as far as 2019.
According to a report from The Times, the board of Aramco will meet this week in order to discuss how to bring the deal forward, after initially planning to present the project to Saudi king Salman bin Abdulaziz al-Saud.
The deal has hit a stumbling block due to the complexities associated with the company's relationship with the state, after officials had claimed that the IPO could place a valuation of $2trn on Aramco.
The listing would offer up less than 5% of Saudi Aramco, with the company hoping to gather $100bn in cash from investors for the shares. Its expected valuation has come unstuck however due to the high level of tax and royalty rates it pays to the House of Saud. Aramco pays as much as 85% tax in the country.
Saudi Arabia is said to favour a flotation on the New York Stock Exchange, while also considering London and Toronto for the IPO.
Other stock exchanges such as Singapore, Hong Kong, Tokyo and Shanghai had been shortlisted as well, but Aramco is understood to have ruled out those options.
The IPO is part of a wider government operation to modernise the Saudi economy and make it less dependent on oil reserves to flourish. Vision 2030 aims to diversify the country's assets, which currently includes pumping 1 in every 9 barrels of oil globally.