By early 2018, a plan emerged to first list shares on Saudi Arabia’s domestic stock market. Then, Falih conceded in May that 2019 was the new target for an international listing. In August, Reuters reported that Aramco was scrapping the IPO. Falih dismissed the report and said the company remained committed to its plan.
The delay makes sense for several reasons, said Wald, who chronicled Aramco’s history in “Saudi Inc.: The Arabian Kingdom’s Pursuit of Profit and Power.”
Today’s IPO market is heavily geared toward companies with huge growth potential, and while Aramco turns tremendous profits, it would be more of a value stock churning out steady dividends, she said.
That is the case for international oil companies like Exxon Mobil and Royal Dutch Shell, but Aramco’s refining and petrochemicals units are small compared with its integrated peers. It makes sense that Aramco would want to shore up this high-value business before being evaluated against other oil majors, according to Wald.
Aramco’s plan to tap the debt market also speaks to those ambitions, in her view.
“It could indicate that they are looking to make massive expansions beyond what they are self-funding and that’s definitely been indicated by some of the news we’ve heard,” she said.
In addition to diversifying into petrochemicals through the Sabic deal, Aramco is reportedly exploring investments in the booming market for liquefied natural gas.
Aramco is in talks to buy a stake in a Russian Arctic LNG project, according to Reuters. Aramco is also mulling an investment in one of several planned U.S. LNG terminals, The Wall Street Journal reported earlier this week.