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Saudi King Overrules World’s Largest IPO

Aramco

Saudi Arabia’s King Salman has demanded that the initial public offering of Saudi Aramco be called off, stepping in to shelve the plans of his heir apparent, Crown Prince Mohammed bin Salman, for what was tipped to be the world’s biggest IPO ever, Reuters reports, citing three sources with ties to Saudi government insiders.

Last Wednesday, reports emerged that Saudi Arabia had called off its highly anticipated, US$100-billion IPO, Reuters sources said, with even plans to list the state-run oil company on its domestic bourse, Tadawul, being scrapped. The listing was expected to be the world’s largest IPO, and the Saudis pegged a large part of the Vision 2030 economic agenda on proceeds from it.

Saudi Arabia immediately denied the reports that the listing was canceled, with Energy Minister Khalid al-Falih saying in a statement carried by the Saudi Press Agency:

“The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum. This timing will depend on multiple factors, including favorable market conditions, and a downstream acquisition which the Company will pursue in the next few months, as directed by its Board of Directors.”

According to one of Reuters’ sources, Saudi King Salman held consultations with family members, oil executives, and bankers in early June. The main concern over listing Aramco was reportedly that an IPO would require full disclosure of finances and reserves of the Saudi state oil giant. Related: International Payments Are Becoming A Geopolitical Battleground

Later in June, the King sent a message to his administrative office—the diwan—demanding the IPO be called off, the sources told Reuters, with one source noting that King Salman’s decision is final.

According to the sources, despite the Aramco IPO halt and a blow to Crown Prince Mohammed bin Salman’s economic reform agenda in which the oil giant’s listing was a key point, MbS remains the favorite son and heir with vast powers over various policies.

By Tsvetana Paraskova for Oilprice.com

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