Abu Dhabi, UAETuesday 10 December 2019

Aramco IPO to boost Saudi Arabia's net asset position, S&P Ratings says

The state oil company plans to deploy the funds raised from the listing to the kingdom's sovereign Public Investment Fund

Receipts from Aramco's share sale will be channelled into the kingdom's sovereign Public Investment Fund. Epa
Receipts from Aramco's share sale will be channelled into the kingdom's sovereign Public Investment Fund. Epa

Saudi Aramco's planned initial public offering could boost the kingdom's net asset position, S&P Global Ratings said in a note.

Receipts from the listing, which is planned for early December on the domestic exchange would be used to support longer-term economic growth in Saudi Arabia, the ratings agency said.

Saudi Aramco, the world's largest oil exporting company is planning to list as much as 5 per cent of its shares in an IPO that is set to rival Alibaba's 2014 listing, which raised more than $21.8bn on the New York Stock Exchange.

The listing of the Saudi oil giant is integral to diversification efforts being pushed by the kingdom's Crown Prince Mohammed bin Salman.

Aramco published its 658-page prospectus on Sunday morning, in which it revealed up to 0.5 per cent of the company's shares will be offered to retail investors. The document did not specify how much of the company will be offered to institutional investors through its domestic listing. A dual listing of its shares on an international exchange could follow at a later date.

Saudi Aramco plans to deploy the funds raised from the listing to the kingdom's sovereign Public Investment Fund, which has become a savvy global investor in recent years, with stakes in Uber, Lyft as well as Tesla.

"Productively deployed, we believe the assets could also help maintain growth potential through our three-year ratings horizon," S&P Ratings said.

The agency, which cautioned against high geopolitical risks, sizeable fiscal deficits and limited transparency of institutions maintains a stable outlook for Saudi Arabia, which it rates A-/A-2.

Updated: November 15, 2019 03:57 PM

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