The NYT has reviewed potential global stock exchanges, at least one of which to win the world’s largest-ever IPO, expected by Saudi oil giant Aramco; London Stock Exchange market has plenty of liquidity and the world’s largest Stock Exchange market is that of New York.
The change in Saudi Aramco’s top pyramid is another sign that the company is moving steadily towards what could be the world’s biggest-ever IPO, the NYT said.
The Saudi government on Monday appointed Yasser Al-Rumayyan, 49, as chairman of Aramco, the governor of the Public Investment Fund with assets estimated at $320bn after the former Saudi Energy Minister, Khaled Al-Falih.
The change is at the top of Aramco’s management pyramid meets some investors’ observation this year when Aramco sold bonds of $12bn, at its first entry into stock exchange markets, according to NYT.
Analysts say that Al-Rumayyan, who has spent most of his career as a banker, may introduce a fund-driven approach to the company.
- Ayham Kamel, head of the Middle East and North Africa department at Eurasia Group, the political risk research and consulting company, said that after the appointment of Al-Rumayyan, a small proportion of Aramco’s shares are initially expected to be sold in the stock exchanges, where the kingdom of Saudi Arabia is considering selling about 5% of Aramco’s total shares for Tens of Billions of dollars.
Aramco, a year ago, delayed the IPO, with the aim of completing the acquisition of the Public Investment Fund (PIF) stake in Saudi Basic Industries Corporation (SABIC).
At present, Saudi Aramco needs to decide where to list the company, which is a huge gain for any stock exchange, as the NYT described.
For Aramco, the choice of where to list its shares is, in many ways, the most important part of the IPO.
Aramco said that it wants to list its shares on both the Saudi Stock Exchange Market, Tadawul and one of the major international stock exchange markets.
Tadawul has fortified its technology resources to deal with the huge amount of trading that Aramco’s listing to IPO will bring.
- Among the global stock markets competing to host Aramco’s IPO are:
New York Stock Exchange (NYSE):
The New York Stock Exchange is the world’s largest stock exchange by market value, favored by Saudi Arabia for its position. (In 2017, President Trump urged Aramco to choose the NYSE as well.) However, advisers to the IPO cautioned against listing Aramco in the United States for political reasons.
London Stock Exchange (LSE):
The London Stock Exchange has plenty of liquidity, and its executives recently contacted Saudi officials as part of a British delegation that visited Jeddah. The LSE also relaxed rules for state-controlled companies, in what critics called a clear grooming of Aramco. However, continued uncertainty over Britain’s withdrawal from the EU may cast a shadow over the LSE opportunities.
Hong Kong Stock Exchange:
The Hong Kong Stock Exchange has changed its rules in ways that benefit companies such as Aramco. It also promoted what it calls “Key Linkage” with mainland China, which helps China’s major financial institutions to invest in proposals in Hong Kong. But it is feared that the unrest associated with the recent protests may continue, raising questions about the stock market’s attraction to Aramco.
Tokyo Stock Exchange (TSE):
The third largest stock exchange in the world by market value, after Nasdaq, and Aramco has a number of links with Japan; Tokyo is home to SoftBank, the Japanese technology giant which is partner with the Saudi PIF in a range of projects, especially the technology investment project of SoftBank Vision Fund, which is worth about $100bn.
The company says that Aramco provides about a third of Japan’s crude oil needs, but the Tokyo Stock Exchange does not have the same status as the stock exchanges in New York, London and, Hong Kong.