RIYADH: Saudi Arabia’s initial public offering of state energy giant Saudi Aramco planned for late next year is likely to be the largest ever, surpassing the $25bn raised by Alibaba in 2014. Deep and active markets are essential for the one or two foreign stock exchanges chosen to host the shares, alongside a listing on the kingdom’s domestic market, the Tadawul. Amin Nasser, chief executive of Saudi Aramco, this week said the company was evaluating different venues.
While New York and London are favourites to lead an international listing, according to sources, the company is studying others, including Hong Kong and Tokyo. Smaller rivals in Toronto, Europe and Singapore are also pitching for a role. The big four offer access to great reserves of investor cash, but they also come with different sets of rules and requirements for officials to consider as they prepare a sprawling state enterprise for life as a public company.
Saudi Aramco’s history might lead it stateside. Before nationalisation in the 1980s, it was controlled by a consortium of US oil companies. The company has ExxonMobil governance structures, and generations of Saudi executives attended American universities. The pageantry of ringing the opening bell at the New York Stock Exchange is also a lure, alongside commercial arguments. “NYSE has historically been the deepest market and deepest not just in terms of trading volume, but also deepest in terms of the [investor and analyst] communities that assist the listed company,” says Ettore Santucci, a partner at law firm Goodwin. As a foreign private issuer, the company would also be exempt from some onerous reporting requirements imposed on US companies: for instance, the need to avoid selective disclosure of non-public information to analysts and investors.
