Saudi energy minister denies Aramco IPO will be called off

[CAIRO] Saudi Arabia's energy minister denied a Reuters report that state oil giant Aramco's initial public offering will be called off, in a statement issued early on Thursday.

"The government remains committed to the initial public offering of Saudi Aramco, in accordance with the appropriate circumstances and appropriate time chosen by the Government, Energy Minister Khalid al-Falih said in a statement released on Saudi Press Agency.

Reuters reported on Wednesday that four senior industry sources said Saudi Arabia had called off both the domestic and international stock listing of Aramco, billed as the biggest such deal in history.

Stock exchanges in financial centres including London, New York and Hong Kong had been vying to host the international tranche of the share sale.

The proposed listing of the national champion was a central part of Crown Prince Mohammed bin Salman's reform drive aimed at restructuring the kingdom's economy and reducing its dependence on oil revenue.

The prince announced the plan to sell about 5 per cent of Aramco in 2016 via a local and an international listing, predicting the sale would value the whole company at US$2 trillion or more. Several industry experts however questioned whether a valuation that high was realistic, which hindered the process of preparing the IPO for the advisors.

An army of bankers and lawyers started to fiercely compete to win advisory roles in the IPO, seen as a gateway to a host of other deals they expected to flow from the kingdom's wide privatisation programme.

International banks JPMorgan, Morgan Stanley and HSBC, were working as global coordinators, boutique investment banks Moelis & Co and Evercore were chosen as independent advisors and law firm White & Case as legal adviser, sources had previously told Reuters.

More banks were expected to be named but no bookrunners were formally appointed despite banks pitching for the deal.

Lawyers, bankers and auditors are all essential in the drafting the prospectus, a formal document that provides essential details on the company.

"The message we have been given is that the IPO has been called off for the foreseeable future," one of the sources, a senior financial advisor, told Reuters earlier.

"Even the local float on the Tadawul Stock Exchange has been shelved," the source added.

Sources had previously told Reuters that in addition to the valuations, disagreements among Saudi officials and their advisers over which international listing venue to be chosen had slowed down the IPO preparations.

REUTERS