Saudi Arabia stops with mega-IPO

Probably the largest IPO of all time is not yet taking place. Saudi Arabia has canceled the emissions of the state-owned oil company Aramco, said four insiders from the Reuters news agency. The placement of a five percent stake in Aramco would have brought the ideas of crown prince Mohammed bin Salman to 100 billion dollars (87 billion euros).

Several foreign exchanges – including London, New York and Hong Kong – had fought for the role as the second stock exchange alongside Riyadh. But among potential investors the question grew whether the oil giant was worth $ 2 trillion. A senior banker told Reuters: "We received the message that the IPO will be canceled in the near future." This also applies to the problem in Riyadh.

Reject work

The investment bankers and other advisers who prepared the listing were released from their responsibilities. "The decision has been made some time ago, but nobody can say that," said an insider from Saudi Arabia. That is why the comments only slowly went in this direction. "First delay, then cancellation." The budget allocated to Aramco for preparations for the IPO was not renewed after June. The IPO had to be managed by the investment banks JP Morgan and Morgan Stanley from the US, as well as the British HSBC.

Saudi Aramco initially did not respond to the request for comment. The Royal Court of Audit did not want to comment on the information.

Plan B prepared

Crown Prince Mohammed had presented the 2016 exhibition plans. He wanted to use the mega-yield to finance the desired restructuring of the Saudi Arabian economy, thereby reducing dependence on the land of oil.

Plan B now seems to come into force: Aramco will instead buy a package of large shares from the petrochemical group Saudi Basic Industries Corp. (Sabic) from the public PIF (Public Investment Fund) fund, which pays money into the state . Reuters learned in July that Saudi Arabia can postpone Aramco's IPO until 2020 with this step. Actually, he would have to stand on the podium this year, but among other things the dispute about the second exhibition and the valuation delayed the project.

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