Lawrence GashSaudi Arabia’s largest oil and natural gas company, Saudi Aramco, is now considering listing in Tokyo for its overseas IPO, the Wall Street Journal reported on Thursday, August 30.
A flotation on the Saudi stock exchange is expected before the end of 2019, followed by an international listing in 2020 or 2021.
The international listing is one of the tent pole policies of Crown Prince Mohammed bin Salman’s Saudi Vision 2030 project, which seeks to diversify the Kingdom’s economy, reducing its dependence on oil revenue.
The initial public offering of one of, if not the most profitable companies in the world was previously expected to take place in London or Hong Kong. However, ongoing Brexit instability and widespread protests in Hong Kong this Summer have weakened the allure of both locations.
Both exchanges will lament the potential loss of a guaranteed blue chip stock listing. In 2018 Saudi Aramco posted revenue of $356 billion and a profit of $111 billion. Earnings for the first half of 2019 dropped 12% compared with last year, to $46.9 billion. That figure is still $15.4 billion more than the world’s currently most profitable publicly-traded company Apple (AAPL).
Aramco is not confirming its pivot to Tokyo, telling CNBC this morning that it “is ready and timing will depend on market conditions and be at a time of the shareholder’s choosing.”
The IPO has fallen through once before when Crown Prince Mohammed Bin Salman could not get his desired $2 trillion valuation. The current $1.5 trillion valuation will still outdo companies such as Microsoft (MSFT), Apple and Exxon Mobil (XOM).
Aramco’s CFO, Al-Dabbagh, vowed this month that the "company is ready for the IPO."
