Saudi Exchange Aims to Be Sole Listing Venue for Aramco Shares

(Bloomberg) -- Saudi Arabia’s stock exchange is gunning for the exclusive right to list shares of oil giant Aramco and will compete with other bourses seeking a piece of what could be the world’s biggest initial public offering, the head of the Saudi exchange said.

The kingdom plans next year to sell a stake in Saudi Arabian Oil Co., as the world’s biggest oil exporter is known formally, and exchanges in London and New York are among those vying for a role. 

“This is our aspiration from Tadawul, to be the sole, the only exchange,” Chief Executive Officer Khalid Al Hussan said Thursday in an interview in Riyadh. “This could be also a very good channel to attract foreign institutional investors.”

Aramco’s IPO is a pillar of an ambitious economic reform program that Crown Prince Mohammed bin Salman proposed to wean the country off oil. The government has said the sale of 5 percent of the shares could value the company at as much as $2 trillion, though analysts have tended to give lower estimates. Bourses in Hong Kong, Singapore, Tokyo and Toronto are also trying to attract the sale.

Yasir Al-Rumayyan, the head of the Saudi sovereign Public Investment Fund, reaffirmed on Tuesday that the country plans to sell an Aramco stake next year, dispelling reports that the share sale would be delayed, speaking at a conference in Riyadh. Any delay would be a setback to the crown prince’s plans as well as the international investment banks and international exchanges eyeing millions in fees and commissions.

‘Very Tight’

The planned timing for a listing next year “will be very tight,” Al Hussan said. “But we have started our work, understanding what needs to be done in any scenario of the structure, so we are ready. Whenever the decision is made, we can flip to the phase of execution.”

In a country where businessmen seldom speak publicly on government affairs, Al Hussan’s comments have prompted two theories among bankers and foreign investors. Either Saudi Arabia is reconsidering its initial plan to IPO Aramco both domestically and internationally, or the government is sending a signal to London -- and to a lesser extent New York -- to put pressure on regulators to ease the rules for listing there.

The Financial Conduct Authority, the U.K. markets regulator, earlier this month defended a proposal to change rules that would make it easier for Aramco to list in London. Lawmakers and investors have expressed concerns on changing the rules to benefit Aramco.

If Saudi Arabia achieves the Aramco valuation it’s seeking, the 5 percent stake it plans to sell would raise about $100 billion. That would eclipse the $25 billion raised by Alibaba Group Holding Ltd. in 2014.

©2017 Bloomberg L.P.