- Saudi Aramco/Handout via REUTERS
- Saudi Aramco’s plans for an initial public offering have stalled because of uncertainty about where to list its shares.
- One top Saudi regulator told Business Insider the country’s domestic bourse is “more aggressively” vying to be the sole listing venue.
The crown jewel of Saudi Arabia – energy company Saudi Aramco, which may be valued at as much as $2 trillion – is eyeing the public markets, but a big question has stalled its plans: Where will it list its shares?
Some of the contenders for the blockbuster initial public offering, which could be the largest ever, include the New York Stock Exchange and London Stock Exchange. A dual-listing on more than one exchange is also a possibility.
There is also Tadawul, the kingdom’s domestic exchange, which is gunning to be the exclusive listing venue for the IPO, according to one top Saudi regulator.
“More recently, we are aware our colleagues in the exchange have been starting to pursue more aggressively an option of a Tadawul-only listing and that is a very credible component in our menu of options that we are preparing for,” Mohammed ElKuwaiz, the chairman of Saudi Arabia’s Capital Markets Authority, said in an interview with Business Insider during a visit to New York.
Some market watchers are unsure about whether the kingdom’s domestic exchange could handle such a colossal initial public offering, according to reporting by The Wall Street Journal.
With a market capitalization of just $430 billion, Tadawul is far smaller than its foreign competitors such as the New York Stock Exchange, which has a market cap of more than $21 trillion. Over 2,000 companies have listed their shares on the NYSE, whereas Tadawul only has 171 listed companies.
The Wall Street Journal reported that Saudi Crown Prince Mohammed bin Salman is partial to a listing on the New York Stock Exchange “because it would gain the company access to the largest pool of investors, as well as prestige.”
However, there are concerns that such a move could leave the kingdom vulnerable to lawsuits from victims of 9/11, the Journal reported.
A representative from the NYSE declined to comment. ElKuwaiz told Business Insider his agency is prepared for any outcome.
“As of last month, we are now quite happy that we are now prepared for every eventuality from a regulatory and technical standpoint, including the eventuality of a Tadawul-only listing,” ElKuwaiz said.
The kingdom’s Capital Markets Authority has played a key role in a regulatory shift to make the country less dependent on oil and more welcoming to foreign investment. The initial public offering of Aramco, which could raise $100 billion, is a key component of that transformation, according to ElKuwaiz.
The much-anticipated IPO was originally expected to occur in 2018, but that timeline now appears less certain.