Aramco Asks Banks To Submit Proposals For Role In Mega IPO (Again)

Authored by Julianne Geiger via OilPrice.com,

The Aramco IPO is one step closer to reality, with Saudi Arabia’s state-run oil company seeking proposals from banks who wish to fulfill various roles in the much-anticipated IPO, Reuters sources said on Monday.

The requests for proposals were sent a few days ago, the sources said. Saudi Aramco declined to comment on the development.

Aramco’s official request that banks submit proposals is a positive development for the IPO, although even with banks handwringing with anticipation, the mega IPO has an uphill battle ahead.

Aramco’s Senior VP of Finance, Khalid al-Dabbagh, said last week that it would announce the IPO based on when the government decided it would be the most optimum time to do so. That comment came just days after Aramco revealed its H1 financials for the first time ever. Aramco’s net profit reported for H1 was $46.9 billion - down 12% from H1 2018.

The Aramco IPO was originally announced three years ago, and were it not for the sheer size of the 5% listing, people may have written off the questionable listing entirely after numerous delays. But the size of even a 5% share of what could possibly be as large as a $2 trillion overall valuation is enough to keep the spotlight on it with just the mere promise of the deal.

The most recent reports are that the listing may happen as early as the beginning of 2020, according to WSJ sources from a week ago. But Saudi officials have been less specific on the timing of the deal, saying only that it would happen sometime in 2020 or 2021.

But the valuation of Aramco may prove to be a sticking point, and the optimum time for listing is unlikely to be at a time when oil prices are low, which would make the sticking point even stickier.