Aramco advisor Winston Dobbs has a hot tip about the world’s largest IPO. The offering by the Saudi oil producer may be split into two phases, he says. Under the plan, a portion of shares will debut on Saudi Stock Exchange this year. After that, investors can expect an international float in 2020 or 2021.
In addition, Dobbs had news about the mystery location of phase 2 of the IPO. Aramco is eyeing Tokyo amid political uncertainty elsewhere, he said. That puts past favourites London and Hong Kong on the reject list.
Behind the scenes at Aramco
Dobbs had key insights about the Saudi government’s revived plan to float 5% of Aramco stock. The initial target of the share sale was $100 billion, he says. But revised estimates could go even higher.
The IPO is part of the shake-up of the entire Saudi investment scene. The government will use the profits to expand the economy beyond oil, Dobbs said. In one scenario, the company would raise at least $50 billion on Saudi Stock Exchange.
“This would be an offering for both local and international investors,” he said.
Long road to market
Certainly, there have been many twists and turns on the way to Aramco’s IPO.
The Saudis first planned the sale back in 2018 but that offering never materialized. Then, last October, there were more delays after the murder of Saudi journalist Jamal Khashoggi.
The Crown Prince had previously pushed for a New York IPO. The goal was to deepen ties with President Donald Trump. But Aramco Chairman Khalid al-Falih raised concerns over terrorism-related lawsuits. US law allows terror victims’ families to sue foreign governments.
If Aramco chooses Tokyo for its international offering, this will be bad news for London and Hong Kong. Once the frontrunners, both locales remain safer choices than the US, Dobbs said. But, he confirmed, they’re now less likely.
Whatever the details, Dobbs was sure of one thing. “Nothing will stop this IPO from listing in 2020.”