For the past two years, investors and especially investment bankers have been salivating at the opportunity to buy (or short), and/or collect billions in underwriting fees for what would eventually be the world's largest publicly traded company: Saudi Aramco, whose valuation would be anywhere between $1.5 and $2 trillion.
They will have to wait some more, because after weeks of news that the "zombie" Aramco IPO was set to go public, it is being delayed once again, with the FT reporting that the Saudi energy giant again postponed the launch of its long-awaited initial public offering on Sunday, "putting the November timeline for the flotation in jeopardy." Aramco was expected to release its IPO prospectus next week ahead of a listing of up to 3% of the company as early as next month.
And again: Saudi Aramco delays its listing. I called it a year ago the "zombie IPO". It seems it's still the case, despite all the Wall Street royalty working on the listing | #OOTT #SaudiArabia @TheTerminal pic.twitter.com/BivqjgHfQG— Javier Blas (@JavierBlas) October 17, 2019
The reason for the latest delay, according to the FT, is that the company wanted to wait until it could provide investors clarity on its most recent quarterly earnings after attacks on Saudi infrastructure last month that temporarily halved production. A source told the Nikkei-owned publication that the results will show the company "did not suffer a material financial hit, adding that there was no set timeframe for the announcement."
It wasn't clear if this was a concern raised by investors... or if the company is merely seeking artificial delays to going public and is now gaming the calendar just so it can go public as late as possible, when the memory of the WeWork IPO fiasco will have faded away from investor memories.
As the FT also notes, the Saudi government was expected to sign off on a domestic listing for Saudi Aramco this week, and a board meeting was expected to follow before the company announced its intention to float on October 20 in Dhahran where the company is headquartered. Another source said that the announcement had been "delayed but not been pulled," while a third person said it had been postponed by “weeks”.
Or just long enough for investors to forget that ever since WeWork almost every single IPO has been a disaster.
Why would Saudi Arabia seek to put the memory of WeWork to rest before going public? Because despite local bankers allegedly "pointing to enthusiasm" among retail investors in Saudi Arabia for the IPO, it is unclear if Prince Mohammed will be able to secure the $2 trillion valuation he has coveted amid doubts by potential foreign investors, who have been turned off by the performance of recent IPO megaduds such as Uber, Lyft and, of course, WeBroke.
And in case there is no demand at $2 trillion, Aramco would have to go public at a valuation of $1.5 trillion, or less. As such the trade off between going public a few weeks late, and boosting the initial valuation by up to $500 billion, is a no brainer.