Report: Saudi Aramco IPO Again In Planning Stages

Saudi Aramco, the Saudi oil behemoth that is the world's largest company in terms of profits, is taking a closer look at an initial public offering, according to Bloomberg.

What Happened

Saudi Arabia explored an IPO for several years and denied reports in August 2018 that it had scrapped its plans completely.

Instead, government officials said an IPO will proceed when market conditions improve. That time may have come, as Aramco has reportedly entertained discussions with several investment banks to explore potential roles in a stock offering, Bloomberg said.

Aramco sold close to $70 billion in bonds to international investors, which makes it "one of the biggest and most successful" offerings in history, Bloomberg's Matthew Martin said on "Bloomberg Daybreak: Americas."

The demand among global investors likely gave Aramco the necessary confidence to proceed with an equity offering, which is part of the country's goal of opening the country to foreign investors and using the proceeds to diversify away from oil.

Why It's Important

Aramco continues to eye a $2-trillion valuation, and this may pose a problem amid lower global oil prices.

The company will have to address growing concerns related to investments in fossil fuel companies as the topic of climate change becomes more of an issue.

Saudi Arabia will also need to carefully select where it lists its stock, as doing so in a U.S. market would open it to litigation risks, according to Bloomberg. 

What's Next

Saudi Crown Prince Mohammed Bin Salman Al Saud is targeting an IPO in 2020 or 2021, but no final decision has been made, Bloomberg said. 

Aramco may be waiting for its $69-billion investment in the chemical company Saudi Basic Industries to close before conducting an IPO, a source told Bloomberg.

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