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Highlights
- Saudi oil giant Aramco is planning to sell more of its shares via a secondary listing in London or Singapore.
- Aramco’s 2019 stock market debut was the world’s largest IPO, raising US$29.4 billion.
With oil prices hitting the roof, oil giants of the Middle East are on the radar of investors. Recent reports suggest that Saudi Aramco, which is the most valuable oil firm across the globe, is planning a multi-billion-dollar deal to sell more of its shares, valuing as much as a US$50 billion, or 2.5% of the company, and that may land in London or Singapore. The additional shares would be sold on the Riyadh stock exchange.
There are reports that Saudi Arabia, which owns the oil behemoth, has already started the plans for the stake sale, and if it happens, it would be the largest sale in history.
Saudi Aramco secondary listing plans
In 2019, Aramco’s debut on the Saudi Stock Market was marked as the world’s largest initial public offering (IPO). The company, though sold just 1.5% of the shares instead of the initially planned sale of 5% aimed at raising around US$100 billion. Aramco, in that record-smashing IPO, raised US$29.4 billion. Now, the listing of additional shares would help the company break its own record after making the largest sale in the history of capital markets.
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For years, the secondary listing plans of Aramco have been in the pipeline. In February 2017, Aramco’s talks with Singapore Exchange (SGX) were reported first by Reuters. Over the years, other bourses like New York, Japan, and Hong Kong were also speculated to be considered; however, the weekend update has cleared the speculations regarding the bourses, with just London and Singapore left on the cards.
As of now, Aramco hasn’t commented on its secondary listing plans. However, as per WSJ, the Saudi Crown Prince Mohammed bin Salman is himself pushing for the plan to complete the sale of Aramco shares by the end of this year or by early-2023.
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After the 2019 IPO of Aramco, the world was struck by the pandemic, which heavily impacted the global energy markets. However, at present international benchmark Brent crude is trading at seven-year highs, and the oil market seems to look good for quite some time due to supply shortfall and excessive demand.
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Could the new listing be a hard sell?
The concept of climate change, sustainability, and ESG investing is grabbing the attention of investors across the globe. As the world is transitioning towards a net-zero energy setup and is making efforts to shift from non-renewable sources of energy to renewable ones, oil firms like Aramco may take the hit. Aramco’s secondary listing would help it break its own record of making the largest sale of shares in the history of capital markets. This can be called a perfect time for the company to go for additional listing of shares as oil prices are touching record highs. The oil giant hasn’t commented about the listing plans yet, but more details are expected soon and can be referred from the company’s website.
(Note: IPO information provided here are, as of 7 February 2022)
